Chapter 7 Bankruptcy

WHAT IS A CHAPTER 7 BANKRUPTCY?

There are several types of bankruptcy. Each comes with its own benefits and challenges. Before advising on your best filing option, or if you even should declare bankruptcy, the Law Offices of Christopher James will review your assets, liabilities and long term goals to ensure you are making the best decision for your unique situation. We have helped hundreds of people in Northern Virginia navigate this complex means for financial relief.

Chapter 7 is a total liquidation, where you list all your debts and assets. Unlike Chapter 11, which requires a restructuring of debt, with 5 years of monthly payments to creditors, Chapter 7 generally means you will not pay money back.

Qualifying for Chapter 7

If you are considering bankruptcy, start with this question: “Do I earn enough to repay my debt?” If you owe more than you can pay off within five years, and currently earn just enough money to meet your bills and expenses, but not enough to pay down debt in any significant manner,you are likely a candidate for Chapter 7.

Example: If you bring home $2,500 after taxes, and your monthly expenses are $2,300 or more, you would likely file a Chapter 7. In areas with a high cost of living, such as Fairfax and Prince William Counties, this scenario is not uncommon.

Debt Forgiveness in Chapter 7

When you file a Chapter 7 bankruptcy, you lists all of your debts and assets on a bankruptcy petition. If your petition is approved, the court will grant a discharge of these debts about 90 days after you file. The discharge will include  all debts incurred up to the day of filing. This means that any new debts incurred after filing will not be forgiven. We encourage our clients to not take on new debt or loans leading up to and following filing for bankruptcy.

Chapter 7 Requires Only One Legal Hearing

When filing Chapter 7 bankruptcy, you will attend a 341 hearing, also called a Trustee’s hearing. You also do not have to go to court; these hearing are held at the office of the US Trustee. It is a brief, 5-minute hearing. You and your attorney meet the Trustee for your case, and he or she asks some standard questions. At the Law Offices of Christopher  James, we will make sure that you are thoroughly prepared for the hearing and ready to answer all questions with ease.

How to File an Electronic Bankruptcy Petition

The Law Offices of Christopher James will file your electronic bankruptcy petition, using specialized software. All you need to do is complete the questionnaire that we provide, and sign the petition we prepare. Once the petition is filed, it is just a matter of waiting the 90 days it will take for you receive a discharge and a fresh financial start through Chapter 7 bankruptcy.

Will My Creditors Contest or Attend the Hearing?

It is rare that a creditor attends a Chapter 7 hearing. Typically, they know that based on US Bankruptcy Law, their claim against you will be discharged. Credit card companies never appear unless you made large purchases or cash advances within 90 days of filing, which can raise a red flag of possible fraud. Still, even in those cases, it unlikely the creditor will pursue it.