A chapter 7 bankruptcy case begins with the filing of a petition, schedules, and statement of financial affairs (“Petition”) in the United States Bankruptcy Court. The overriding goal in Chapter 7 is to allow an honest debtor to discharge his or her debts. Discharge means the legal forgiveness of debt or the abatement of the legal obligation to pay the debt.
When consulting your lawyer about bankruptcy, it is very important to list and disclose all property, debts, and information concerning your financial affairs along with all other requested information on the bankruptcy forms. The failure to do so may result in adverse consequences. A criminal referral or loss of discharge may result if assets, debts, and material information is not disclosed on your petition. The failure to list a creditor may mean the debt to that creditor will survive bankruptcy and that creditor can still collect the debt.
Once the petition is filed, a trustee (administrator) is appointed in the case and the Court issues an Automatic Stay Order. The automatic stay works just like a stop sign and is notice to creditors to stop collection activities against a debtor and his or her property. The automatic stay order will stop garnishments, foreclosures, and harassing calls and collections letters and action. It will not stop the collection of support obligations or criminal proceedings. Within 20 to 40 days after filing, debtors and creditors will receive a notice to appear at a 341 meeting of creditors. The Trustee and creditors may examine a debtor regarding their financial affairs at a 341 hearing. About four months after filing, a debtor is entitled to obtain a discharge, provided the debtor meets the necessary requirements under the bankruptcy code. Some debts, such as student loans, cannot be discharged in most cases.
Most individuals worry that in filing for bankruptcy relief, they will lose all their property. This is not true. In Kansas, a debtor may protect (which the bankruptcy code refers to as “exempt”) certain property that includes, but is not limited to, a homestead, household goods, and a vehicle. Joint debtors may exempt up to two vehicles. Exemptions have certain limitations, restrictions and can be nuanced. You should consult Darcy as to which property you may properly exempt.
Property that is secured (encumbered with a lien or mortgage) may be retained by a debtor if the debtor so desires. To keep such property a debtor may reaffirm with his or her creditor, redeem the property for value in one lump sum, or in some instances retain the property and continue to pay on the obligations. Of course, keeping such property may not be in your best interest and all debtors have the option of surrendering the property and walking away from the obligation.
WHY SHOULD YOU HIRE A LAWYER?
Darcy can help you conduct pre-bankruptcy planning to maximize the assets you may keep before filing bankruptcy. Darcy will personally assist in you completing your bankruptcy schedules – so that your creditors, property, and matters related to your financial affairs are properly listed and disclosed. Darcy will identify and inform you of what debts, if any, will survive your bankruptcy and will not be discharged or forgiven.
Darcy will assist you with any reaffirmation agreements, redemption, or the surrender of or payment of property you want to keep. In addition, she will attend all required hearings with you. If these are not done properly, the Court may deny your reaffirmation agreement or redemption motion and you may risk losing your exempt property. Should creditors violate the stay or permanent injunction during your case or years afterward, Darcy will assist you to stop that harassment. Having the right lawyer who is experienced and cares makes a difference in the outcome of your case. Above all, Darcy will personally explain to you all of your options, which include non-bankruptcy options, as well as which chapter under the bankruptcy code best fits your situation.