Chapter 7 Bankruptcy FAQs

What is the United States Bankruptcy Code?

The United States Bankruptcy Code, also known as Title 11 of the United States Code, is a complex set of laws that govern the procedures for filing bankruptcy in the U.S. 

Where are bankruptcy cases filed?

Bankruptcy cases are filed through the federal court system. To start the process, the debtor files a petition in bankruptcy court. 

What are the most common bankruptcy options?

Chapter 7 and Chapter 13 are the two most common categories of bankruptcy. Chapter 7 bankruptcy is a liquidation process, while Chapter 13 is a reorganization. 

How does Chapter 7 bankruptcy work?

Chapter 7 bankruptcy is a liquidation process in which a bankruptcy trustee sells off some of your property to pay off most of your debts incurred before the bankruptcy process starts. Generally, most debts are forgiven. Under this type of bankruptcy, the debtor is entitled to keep any assets that are considered exempt, meaning they are protected from liquidation in the bankruptcy. 

Can filing under Chapter 7 stop lawsuits, garnishments or attachments?

Yes. The filing of a Chapter 7 case automatically stays or stops most lawsuits and attachments that have been filed against you. Usually with 7-10 days after your Chapter 7 case is filed, the court will mail a notice to all your creditors ordering them to refrain from any further collection action against you. However, when necessary, we will immediately notify one or more of your creditors of the filing of your case. 

How does filing under Chapter 7 affect my credit rating?

It depends. Some financial institutions openly solicit business from people who have recently filed under Chapter 7, apparently because it will be at least eight (8) years before they can file under Chapter 7 again, and their financial situation is better because they have little or no debt. If there are compelling reasons for filing under a Chapter 7 that are not within your control (such as illness or injury), some credit rating agencies may take that into account in rating your credit after filing. Inquire with our office for detailed information. 

What is a Chapter 7 discharge?

It is a court order releasing you from all of your dischargeable debts and ordering the creditors not to attempt to collect them from you anymore. A debt that is discharged is one that you are released from and do not have to pay. Some debts, however, are not released by a Chapter 7 discharge, and some people are not eligible for a Chapter 7 discharge. 

How long will it take to get my discharge in a Chapter 7 bankruptcy?

If everything goes smoothly in your Chapter 7 case, the U.S. Bankruptcy Court will mail a form called “Discharge of Debtor” to you and your creditors approximately 150 days (5 months) after you file.

Chapter 7 Bankruptcy Definitions

Chapter 7 means test. The means test is an analysis that determines who can file for Chapter 7 bankruptcy protection. The means tests compares your monthly income and expenses to see if you have enough disposable income to repay your debts. 

Chapter 7 bankruptcy trustee. The Chapter 7 trustee is an officer of the court appointed to administer your Chapter 7 case. The Chapter 7 trustee’s duties include conducting the meeting of creditors, gathering any of your nonexempt property of significant value, turning it into cash, using the cash to pay your creditors and ensuring that you perform all of your duties as a Chapter 7 debtor. A trustee is appointed in a Chapter 7 case even if the debtor has no nonexempt property for the trustee to collect. The debtor has a duty to cooperate with the trustee and provide the trustee with information he or she requests. 

Creditor.  An individual or business who is owed money by the debtor. 

Discharge of Debtor. A bankruptcy court order that releases a debtor from the obligation to repay the dischargeable debt. A Discharge of Debtor prohibits creditors from continuing collection attempts on pre-petition debt. 

Dischargeable debt. Debt that is forgiven under bankruptcy protection, meaning you are no longer responsible for paying it back. The most common dischargeable debts include:

• • Medical bills
  • Credit cards
  • Personal loans
  • Utility bills
  • Civil court judgments 

Meeting of Creditors. About 4 to 5 weeks after you file for Chapter 7 bankruptcy, you must attend what bankruptcy law calls the “meeting of creditors.” This administrative hearing is conducted by the Chapter 7 trustee assigned to your case; no judge is present. An attorney from our office (if retained) will accompany you at the meeting. The trustee asks you very simple questions which can be answered with “yes” or “no.” Any of your creditors attending the meeting may then briefly ask you a few questions. This is rare however, since in most consumer Chapter 7 cases none of the creditors appear at the meeting. 

Non-dischargeable debt. Debt that cannot be eliminated through Chapter 7 bankruptcy protection. Some of the most common non-dischargeable debts are:

• Debts for certain taxes, including taxes that became due within the last three years;
• Debts for obtaining money, property, services, or credit by means of false pretenses, fraud or a false financial statement (including certain debts for luxury goods or services, and for certain cash advances made within 90 days before the case is filed);
• Debts for fraud, embezzlement or larceny;
• Debts for alimony, maintenance, or support, with certain very limited exceptions;
• Debts for intentional or malicious injury to the person or property of another;
• Debts for student loans, unless not discharging the debt would impose an undue hardship on the debtor;
• Debts for death or personal injury caused by the person driving a motor vehicle, piloting a vessel or flying an aircraft while legally intoxicated;
• Cash advances totaling $750 made within 70 days of filing for bankruptcy;
• Debts incurred to pay a non-dischargeable tax owed to a government unit, other than a tax owed to the U.S. 

Petition. The document filed with the bankruptcy court to start the formal process in that court. 

Schedules and Statements. Form documents that a debtor must file so the trustee and creditors will know (a) what the debtor’s assets are, (b) what assets are exempt, (c) what the debtors liabilities are, (d) their classification under the bankruptcy (e) and other information relevant to the process.

To schedule an initial consultation with a bankruptcy attorney, please call Hymson Goldstein Pantiliat & Lohr at 480-991-9077 or contact us via Email. We can provide the individually tailored advice you need to make strategic decisions for debt relief. We pride ourselves on responsive, personalized attention to each matter and understand that every member of our team plays a valuable role in your client experience. From our attorneys, to our legal assistants, to our administrative staff, we are committed to providing you with exceptional legal service.

Hymson Goldstein Pantiliat & Lohr, PLLC is a Debt Relief Agency under the bankruptcy code.

David B. Goldstein is an experienced bankruptcy attorney concentrating his practice in commercial and individual bankruptcies. He is listed with the United States Bankruptcy Court for the District of Arizona as a court-appointed mediator.