In the United States, the bankruptcy system was put into place to help balance the economy in times of a depression, support individuals and businesses who will never be able to repay their debts, and provide creditors with some form of possible compensation. If you are struggling to meet debt payments each month, you may want to consider bankruptcy as a viable option for permanent debt relief. Behm Law Group Ltd. can provide you with important legal support and guidance through a Chapter 13, Chapter 12 or Chapter 7 bankruptcy in Windom, MN, and the surrounding area.
Chapter 7 bankruptcy is the most commonly filed type of individual bankruptcy case in the United States. The process of Chapter 7 bankruptcy works to liquidate the filer’s non-exempt assets in exchange for the discharge of one’s various debts. Credit card debts and medical bills are often the most common debts involved in an individual Chapter 7 bankruptcy, but other debts like mortgages and car loans can also be involved in many cases.
The process of filing for Chapter 7 bankruptcy is relatively straightforward, but each step must be done properly and in a timely manner or your case could be at risk of being dismissed. Generally speaking, the steps of a Chapter 7 bankruptcy include the following:
- Consultation: An initial consultation with a bankruptcy attorney is the first step in any case. Behm attorneys help you determine if Chapter 7 is right for your financial situation and where to go from there.
- Scheduling payments: After the initial consultation, we work with you to plan a payment schedule of our attorney costs and the court fees.
- Petition: Once we’ve determined a payment schedule that fits your income, we guide you in completing the necessary paperwork involved in your petition. This information includes comprehensive debt and income details, your tax returns, bank statements, and any other relevant financial documentation.
- Credit counseling: Part of qualifying for Chapter 7 bankruptcy is taking a court-approved credit counseling course. This course can be completed online and takes about 60 to 90 minutes to complete. It is available at minimal cost.
- Case preparation: Once you submit your financial information to our attorneys, we review your paperwork and forms to ensure everything is correct. We also spend time pinpointing potential issues that might arise with creditors or the trustee, and we work to eliminate or mitigate any potential problems.
- The 341 hearing: The 341 hearing (or Meeting of the Creditors) is another requirement that must be completed before you receive your discharge and before your case can be closed. This typically involves a short meeting with the trustee to answer relevant questions to verify, under oath, the information in your bankruptcy petition. Creditors can attend, but they frequently don’t find it necessary to do so.
- Financial Management/Debtor Education: Before you are eligible to receive a bankruptcy discharge, you must complete a second course called “Financial Management” or “Debtor Education”. This course provides various tips and techniques to help one budget one’s finances more efficiently and manage one’s debts more effectively going forward. Like the credit counseling course, this course can also be completed online and it takes about 2 hours to complete. It also is available at minimal cost.
- Debt discharge: Once your petition is submitted to the court and your 341 hearing has been conducted and you’ve fulfilled all of the other bankruptcy code requirements, your debts are discharged and all of your creditors receive a copy of the discharge order issued by the bankruptcy court. The discharge order permanently prevents your creditors from pursuing you for any debts that you owed them. It also operates as a warning to your creditors that they could be sued and severely sanctioned by the bankruptcy court if they continue collection activities against you.
- Trustee administration: Finally, the trustee goes through the process of selling any non-exempt assets and distributing the sale proceeds to creditors. This is the last step in your case before it’s closed. However, in most cases all one loses are one’s debts. The bankruptcy code exemptions, which are used to protect property, are quite generous and they are normally sufficient to protect all of one’s property.