Chapter 7 Bankruptcy Proceeding

 

When a Debtor files a Chapter 7 bankruptcy petition with the Bankruptcy Court, the Debtor is protected by the automatic stay which ends debt-collection activity. During the automatic stay, Creditors cannot demand payments from the Debtor or start any lawsuits against him/her as long as the automatic stay is in effect.

 

A Trustee is appointed by the Court to supervise the Chapter 7 case and eliminate the Debtor’s assets to repay the debts. The majority of consumer bankruptcies turn out to be a “no asset” case, wherein there are no assets to liquidate. The Trustee has certain “avoiding powers” to return funds to the estate. If there are assets, the Trustee is responsible for collecting the sale proceeds and repaying the debts. Between 20 and 40 days after the Debtor files his/her petition, the Trustee organizes a meeting of Creditors where the Trustee asks the Debtor questions pertaining to their assets and their debts. Creditors may be present during that meeting.

 

After all of the Chapter 7 proceeds are concluded, most remaining uncovered debts are discharged. That means that the Debtor does not have to repay these debts because they no longer exist. Nevertheless, particular debts can’t be discharged such as student loans, domestic support obligations along with some other specific debts.

 

For more questions please contact Chapter 7 Bankruptcy Lawyers.