The following section sets forth the easy steps that are involved in preparing, processing, and completing a successful Chapter 7 case. The object is to get a discharge and wipe out all of our client's debts. Let us show you how we help our clients accomplish this goal.
A Chapter 7 bankruptcy is started by filing a document called a petition. The petition is about 70 pages long. We must conduct several detailed meetings with you to obtain from you all of the important financial information that will be needed to accurately complete the petition. The case officially begins when we electronically file the Chapter 7 with the Bankruptcy Court, and the $335 filing fee is paid to the Court.
Our office can immediately notify any creditors that need to be notified that your case has been officially filed. If a creditor takes action against you after being informed that you have started your bankruptcy, that creditor can be punished by the Bankruptcy Court.
The Bankruptcy Court Clerk's Office also quickly notifies all of your creditors. You will be getting copies of the same notices that your creditors get. Therefore, when you get your notice in the mail you know that your creditors have also been notified.
Here are some examples of the types of creditors that can be notified of your bankruptcy filing:
- If you are behind in your utility bills, we can notify utility companies so that your utilities are not shut off. You can normally wipe out your utility bills through a bankruptcy filing. If your utilities have been shut off before your bankruptcy has been filed, the public utility companies will have to promptly restore your service after your bankruptcy has been filed.
- Mortgage company foreclosure proceedings or sheriff sales are usually stopped.
- We can notify car finance companies so that there will be no vehicle repossessions. If your vehicle has been repossessed, it would normally have to be returned to you upon submitting proof of full coverage automobile insurance.
- If your landlord is trying to evict you, we may be able to stop that.
- If the IRS is withholding your refund or taking other action against you, that has to stop upon filing of bankruptcy.
- If anyone is trying to attach your wages, they will usually have to stop. If anyone already has a wage attachment against you, that will usually have to stop. If any money is taken out of your wages after your bankruptcy has been started, it will usually have to be returned to you by the creditor that took your money. Sometimes we can even get money back that was taken from your pay check before you filed bankruptcy, so please let us know if you have a wage execution. If they took $600 or more from your salary within the 60 days before your case is filed, there is a good chance that we can get you the money back.
- If anyone has frozen your bank account, you may still be able to get your money back.
- If you have lost your driver's license due to inability to pay surcharges, we can work on helping you get your license back.
- If anyone is suing you for just about anything, that lawsuit will usually have to stop, unless the bankruptcy court gives the creditor or any other party that is suing you permission to continue with the case against you.
The court will assign a case number to your case. With electronic filing, we now get an immediate case number. You will also receive a copy of the case number in the mail within a few days after your bankruptcy case has been filed.
You will also receive a document from the bankruptcy court called Notice of Chapter 7 Bankruptcy Case. Your creditors also receive this document, and that is their official notice from the Bankruptcy Court that you have started your case and listed them as a creditor. Please review that document carefully because it gives you information as to when and where you need to appear for your bankruptcy meeting. The meeting is called the Meeting of Creditors, but actually creditors hardly ever appear.
The bankruptcy meeting is not before a judge. It is simply before a person appointed by the court to act as what is called a “trustee”. The meeting usually takes five to ten minutes, and is usually very easy. There is nothing to worry about. The meeting is normally scheduled in Camden at 8th and Cooper Street, in room 102 of the Bridge View Building. We will give you directions. If you live in Cape May County or Atlantic County, the meeting is scheduled at 1423 Tilton Road in Northfield.
This Is What Happens at Your Chapter 7 Meeting
We will be there with you at the meeting, and you will be fully prepared to answer all questions. You do not have to appear in court. This meeting takes place with a lawyer in a small room in an office building. They schedule about 7 meetings for every 30 minute block of time, so you can see that in most cases the meeting takes about 5 minutes or less. You probably already know all the answers to the questions that the lawyer is going to ask you because they are very basic and simple. The most important things that you need to remember are to simply relax and tell the truth.
Also, you do not have to be dressed up. You can wear the clothes you normally wear on a typical day. It is usually not a good idea to wear any kind of fancy clothing or expensive looking jewelry.
Your attorney is with you and will review your petition with you before you appear in front of the trustee, so you should show up for the meeting about 15 minutes before it is scheduled.
The meeting takes place in a public room, so you can expect that there will be maybe 5 other bankruptcy clients in the room, and maybe 2 or 3 other lawyers.
When you go to your meeting, you must bring your social security card and a government approved photo ID. If you do not bring these items, you will probably have to come back again. The following is the procedure:
- You are sworn in by the trustee to tell the truth. Everything is usually pretty informal. The meeting will take about 5 minutes in most cases.
- Be prepared to show the trustee your social security card and a valid government approved photo ID that has not expired. If you bring your driver's license, make sure it is a current license and not an expired license.
- You will be asked to verify your signature on the bankruptcy petition. You will also be asked to verify that you reviewed the petition before you signed it and that all the information was true and correct. If there are any changes or additions you want to make, let the attorney from our office that is with you know before you are sworn in. Tell your attorney about any changes before you go in front of the trustee. An example of a change would be a new address, new job, adding a new creditor that you might have forgotten, or any other corrections or additions that were not originally included for whatever reason.
- If you own a house or real estate, the trustee will ask you the following:
- when did you buy the house or real estate
- what was the purchase price
- what is the property worth now.
- what is the approximate payoff on any mortgages you owe.
- If you have financed a car, the trustee may ask what you think the car is worth, and how much you still owe to pay off the car.
- The trustee will normally want to see one or two recent pay stubs. Bring a pay stub that shows what your average weekly or biweekly income is. Don't bring a pay stub that shows too much income because of unusual overtime. Don't bring a pay stub that shows too little income because it does not cover a full pay period.
- Be prepared to answer the following questions:
- Have you transferred, given away, or sold any property to anyone in the last 4 years before you filed for bankruptcy?
- Have you been injured in an accident, and are you making a claim against anyone, or have you filed a lawsuit against anyone for your injuries where you are trying to get money?
- Do you have any other types of claims or lawsuits against anyone? If the answer to any of the above questions in yes, make sure that you let the attorney that is with you know this before you are sworn in to answer the trustee's questions. In most situations, you will have already been asked these questions by us when we met with you in our office, and you will already have been prepared for these questions.
- When is the last time you used any of your credit cards before you filed for bankruptcy? If you used any credit card within 90 days before you filed your bankruptcy, make sure to let us know before you get sworn in for your meeting.
- The trustee will also usually make an announcement to all of the people in the room that if they inherit any property within 6 months of the filing of their bankruptcy, make sure to let your attorney know. If you have any inheritances pending as of the date of the trustee meeting, make sure you tell us all about it
- The final question by the trustee is usually something like this: “What happened in your life that caused you to file for bankruptcy?” The trustee is not looking for any long drawn out answer.
- You can normally answer this question in 20 words or less. For example, if it was a loss of job, medical problem, accident, marital issues, legal issues, mismanagement of your money, or anything like that, that's really all that you have to say.
- After that, the trustee will usually conclude the hearing, and you are now on your way to obtaining your discharge and wiping out your debts.
After the meeting is concluded, the trustee will submit a report to the bankruptcy court to indicate that you qualify for a bankruptcy discharge and that you should be approved. If for some reason the trustee does not feel that your bankruptcy should be approved (this is pretty unusual), the trustee will let us know what has to be done so that your bankruptcy can be approved. This might happen in about 5% or less of the cases that are submitted.
After your meeting, you will be getting one or more documents from the bankruptcy court and you should be aware of what those documents mean. The most important document is the Bankruptcy Discharge. This will be received about three months after you have had your meeting.
Keep the Discharge document because this is the proof that all of your debts have been forgiven and legally wiped out. If any creditor ever tries to collect from you in the future and you have listed that creditor in your bankruptcy, the discharge is your proof that your debt has been wiped out.
If you own real estate, you will probably receive in the mail a document called a Notice of Proposed Abandonment of Property. This means that the trustee is abandoning his right to make any claims against your property, and that you can keep your property without any problem.
If you read this document, it is worded in “legalese”, and it might cause you to worry if you didn't know ahead of time what it meant. Because the document is called Notice of Abandonment, people sometimes think that they must abandon or give up their home or other real estate.
That is totally incorrect. In fact, the opposite is true, and it is good news when you get that document. The document mentions a court date in the event anyone objects. It is extremely rare that anyone objects, and you do not have to go to court on the court date mentioned in the Notice of Abandonment.
Thus, when you receive the Notice of Abandonment, it is great news, and you are on your way to successfully completing your case and receiving your discharge. So, when you get this notice, be happy and celebrate your victory over debt.
If you are working and paying your new bills after you have filed your bankruptcy case, you might be very pleasantly surprised to see that credit card companies are soliciting you and offering you credit cards after you have been discharged. This is not unusual, and it is not very hard to reestablish credit if you maintain good employment and pay future bills.
If you ever need assistance with buying a house, obtaining a mortgage, or financing a car in the future, feel free to call us because we know people in the business that help our clients who have successfully gone through the bankruptcy process.
After you have your discharge, you are legally entitled to the fresh start provided by the bankruptcy laws. Obtaining your discharge is the official conclusion of your bankruptcy case in most situations unless you are expecting to receive a substantial asset in the future, like an inheritance of a large settlement on a personal injury case.
In that type of situation, the bankruptcy court could keep your case open until the court has complete information as to the amount of your personal injury settlement.
If you inherit any property within six months of filing your bankruptcy, you must notify us and the bankruptcy court.
Most people find that their lives are much better after they have gone through the bankruptcy procedure. Married couples have told us that their marriage has improved because of much less financial stress and tension.
You actually do not have to wait for your discharge to get your fresh start, because all creditors have to stop contacting you immediately upon the filing of your bankruptcy. Therefore, if any creditors contact you directly after you have filed bankruptcy, simply tell them that you are in a Chapter 7, give them the date your bankruptcy was filed and your case number, and they have to leave you alone. If they do not leave you alone, they may be violating federal laws, you could possibly sue them, and you might get rich.
The Goal in Chapter 7
For most clients, the goal in Chapter 7 is to wipe out all of their debts, obtain a discharge from the Bankruptcy Court, and keep all of their assets, including their money, their home, their vehicles, their personal property, and their retirement funds.
Chapter 7 is a pretty liberal law for debtors. When filing Chapter 7, you are allowed to own a home, cars, jewelry, and other assets, and you may maintain active bank accounts. You are allowed to have money and assets and still wipe out your debts. Of course there are limits as to the value of the assets you own, and we will review those limits with you when we meet with you and prepare your case.
There are also limits on the amount of money you can earn and still qualify for Chapter 7. For example, if you are a single person, and you are making over $100,000 per year, that is well above the legal limit, and instead of filing a Chapter 7, we would probably discuss other alternatives with you, such as debt settlement, or maybe filing a Chapter 13 where you might just pay back a small portion of your debts.
The amount of income you earn per month compared to the amount of reasonable expenses you have per month can also be a factor in determining whether you can wipe out all of your debts.
For example, let's assume you have $40,000 in credit card bills that you would like to wipe out. You need to disclose your income and expenses on a monthly basis, and you may need to demonstrate that you simply do not have enough money to pay the normal monthly bills, let alone your credit cards.
Let's assume you earn $4000 per month and also have $4000 in reasonable and necessary expenses, not including your credit card debt. In this example you obviously can't afford to pay the credit card bills and you qualify to wipe them out by filing for Chapter 7.
On the other hand, if you earn $4000 per month, but you have only $3500 in reasonable and necessary monthly expenses, the court could say that since you have $500 per month left over, you should use that $500 to pay some of your credit card bills. This type of situation might prevent you from filing a successful Chapter 7. If it turns out that you have excess monthly income that would allow you to pay some of your credit card bills, we will propose some potential alternate solutions that could help you get a fresh financial start.
The ultimate goal in Chapter 7 is to obtain that discharge, have all of your debts forgiven by the federal government, and keep all of your property. In order to get that discharge, you must complete the debtor education program, and you can do that on the internet or by phone. It usually takes about 90 minutes to 2 hours to complete this program.
Once you get that discharge, why not celebrate your victory over debt. Reward yourself for having taken responsibility, and having used the laws of this country for the purposes for which they were intended. Maybe you'll even feel like throwing a victory over debt party for yourself, your family, and your friends.
Enjoy the new beginning that our United States Constitution has permitted you to achieve. Savor and enjoy the feeling of finally being debt free. And who knows, a few years from now you just might be saying that having filed a Chapter 7 bankruptcy was one of the smartest moves you ever made.