Chapter 7 Basics

What is Chapter 7?

Chapter 7 bankruptcy is sometimes referred to as “no-asset” bankruptcy or “straight bankruptcy.” The term “no asset” can be misleading, however… in fact, most of our Chapter 7 clients have a car and a house, or at least a car. What we look at is how much “equity” you have in those assets. In other words, how much money would you actually pocket if you were to sell your house, pay the taxes, pay the realtor commissions, and pay off your mortgage(s)? If you are like most Ohioans in this economy, you would walk away empty-handed, but Ohio law does allow you to have a certain amount of equity in various assets and still file a Chapter 7. A married couple, for example, can have over $40,000.00 in equity in your home and still file a Chapter 7!

 

What is the procedure for filing a Chapter 7 bankruptcy?

At your free initial consultation with one of our experienced attorneys, which will take about 30-45 minutes, we will get a complete picture of your financial situation and pinpoint any potential issues that might arise in your case. Some of the things we will ask you about are:

· Are you behind on your mortgage?

· Are you behind on your car loan?

· Do you have any utility shut-offs?

· Do you have past due taxes?

· Have you given any money to friends or family members in the past year?

· Do you want to keep your house and car?

· How much are you paying on your credit cards per month?

· Are you behind on Child Support?

· Do you expect any increases or decreases in your income in the next 6 months?

One of the last things we will do at this first appointment is go over our Bankruptcy Workbook with you. This is a booklet you take home to fill out and list all of your assets, debts, monthly income, and monthly expenses.

We will also give you information about the required Credit Counseling course that you must take in order to be eligible to file bankruptcy. The 2 companies that we generally recommend are www.Hummingbird.org and www.FinancialLit.org . This course can be completed either online or by telephone.

Once we receive your completed Bankruptcy Workbook back from you, as well as a down payment toward your legal fees, we will open a file for you and begin preparing your bankruptcy petition that will eventually get filed with the court. There is also some documentation we are required to collect from you before filing your case. While our attorneys are reviewing your Workbook, one of the paralegals will be making sure that we have all the documentation we need from you. This is a partial list things we will be asking for:

· Copy of the title(s) to your vehicles

· Proof of your income for the past 7 months

· Copy of the deed to your home

· Copy of your driver’s license and social security card

Your second appointment will be to review and sign your bankruptcy petition. At this time, an attorney will review the entire petition with you so that any corrections or updates can be made if necessary. You sign this document under penalty of perjury, so it is extremely important that everything is as accurate as possible.

One we file your case, the court will assign a hearing date, which will take place approximately 20-40 days after the case is filed.

Note: if you live in Ashland or Richland County, your hearing will beheld in Mansfield. If you live in Holmes or Wayne County, your hearing will be in Canton.

This hearing is often referred to as the “341 Hearing” (which refers to the chapter in the Bankruptcy Code that mandates it) or as the “Meeting of Creditors.” At this hearing, your creditors have the opportunity to appear and ask you questions, but, practically speaking, this almost never happens. The purpose of this hearing is for the bankruptcy trustee (an attorney who oversees the bankruptcy cases) to put you under oath and ask you questions such as:

· Did you review the petition before your signed it?

· Are you aware of any changes or corrections that need made to it?

· Have you given any money or property to any friends of family members in the past year?

· Does anyone owe you money or do you have the right to sue anyone?

You will be under oath for approximately 5 minutes.

Approximately 60-90 days after your case was filed, the court will grant the discharge of your debts, meaning you are no longer legally responsible for paying them and typically the case will close shortly after that.

 

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The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 Requires the following notice:
We are a Debt Relief Agency. We help people file for bankruptcy relief under the Bankruptcy Code. This web site is not an offer to provide bankruptcy assistance services to any assisted person as defined under Section 527(a)(2) of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.