Bankruptcy – Chapter 7
ASK LLP is experienced in helping individuals residing in New York and New Jersey wipe out some or all of their debt through the Chapter 7 bankruptcy process. ASK LLP attorneys know that filing for Chapter 7 is a personal and often scary decision. Our attorneys will take the time to explain the bankruptcy process to you, explore the various bankruptcy and non-bankruptcy options available to you, and hold your hand each step of the way. ASK LLP attorneys are admitted to practice bankruptcy law in New York and New Jersey. ASK LLP represents many Chapter 7 bankruptcy clients in Brooklyn, Manhattan, White Plains and Long Island. To learn more about Chapter 7, read on.
What is Chapter 7?
A Chapter 7 bankruptcy is ideal for individuals who have a lot of unsecured debt (such as credit card debt) and who are not making a lot of money and do not have many assets. One of the primary purposes of bankruptcy is to discharge certain debts to give an honest individual debtor a “fresh start.” The debtor has no liability for discharged debts. Although an individual Chapter 7 case usually results in a discharge of debts, the right to a discharge is not absolute, and some types of debts are not discharged.
Chapter 7 Eligibility
To qualify for relief under Chapter 7 of the Bankruptcy Code, the debtor may be an individual, a partnership, or a corporation or other business entity.
How Chapter 7 Works
A Chapter 7 case begins with the debtor filing a petition with the bankruptcy court serving the area where the individual lives. A husband and wife may file a joint petition or individual petitions.
Filing a petition under Chapter 7 “automatically stays” (stops) most collection actions against the debtor or the debtor’s property. As long as the stay is in effect, creditors generally may not initiate or continue lawsuits, wage garnishments, or even telephone calls demanding payments. The bankruptcy clerk gives notice of the bankruptcy case to all creditors whose names and addresses are provided by the debtor.
Role of the Case Trustee
When a Chapter 7 petition is filed, the U.S. appoints an impartial case trustee to administer the case and liquidate the debtor’s non-exempt assets. The trustee interviews the debtors to ensure that the debtor is eligible to file for Chapter 7 and may sell the debtors “non-exempt” assets to pay off its creditors.
The Chapter 7 Discharge
A discharge releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor. Because a Chapter 7 discharge is subject to many exceptions, though, debtors should consult competent legal counsel before filing to discuss the scope of the discharge. Generally, excluding cases that are dismissed or converted, individual debtors receive a discharge in more than 99 percent of Chapter 7 cases. In most cases, unless a party in interest files a complaint objecting to the discharge or a motion to extend the time to object, the bankruptcy court will issue a discharge order relatively early in the case – generally, 60 to 90 days after the date first set for the meeting of creditors.
An individual receives a discharge for most of his or her debts in a Chapter 7 bankruptcy case. A creditor may no longer initiate or continue any legal or other action against the debtor to collect a discharged debt. But not all of an individual’s debts are discharged in Chapter 7. Debts not discharged include, but are not limited to, debts for alimony and child support, certain taxes and debts for certain educational benefit overpayments or loans made or guaranteed by a governmental unit. The debtor will continue to be liable for these types of debts to the extent that they are not paid in the Chapter 7 case.