Chapter 7 bankruptcy is the “reset” button. A Trustee evaluates the estate for high-value items that can be sold for the benefit of creditors. Most people in bankruptcy don’t have large amounts of equity in property, so-called “no asset” cases, and in many cases they keep their property and lose their debts completely.
What is a discharge?
A discharge is a Court order releasing debtors from obligations to pay debt.
Are all debts dischargeable under chapter 7?
Some debts just stick around forever, no matter what you do—except in the rarest of cases. Examples of non-dischargeable obligations are debts:
- For taxes
- Obtained by false pretenses, fraud, or false financial statement
- For fraud, embezzlement, or larceny
- Alimony, maintenance, or support
- Intentional or malicious injury
- Certain fines or penalties
- Student loans and educational benefits
- Personal injury or death caused by DUI
- That were or could have been listed in a previous bankruptcy case of the debtor in which the debtor did not receive a discharge
Who can file a Chapter 7?
Anyone who resides in, does business in, or has property in the US may file unless that person had a bankruptcy case dismissed within the last six months, for cause.
Who can’t file a Chapter 7?
- Has been granted a discharge in a chapter 7 case filed within the last eight years.
- Has been granted a discharge in a chapter 13 case filed within the last eight years, unless 70 percent or more of the unsecured claims were paid off in the chapter 13 case.
- Files a waiver of discharge that is approved by the court in the chapter 7 case.
- Conceals, transfers, or destroys his or her property with the intent to defraud his or her creditors or the trustee in the chapter 7 case.
- Conceals, destroys, or falsifies records of his or her financial condition or business transactions.
- Makes false statements or claims in the chapter 7 case, or who withholds recorded information from the trustee.
- Fails to satisfactorily explain any loss or deficiency of his or her assets.
- Refuses to answer questions or obey orders of the bankruptcy court, either in his or her bankruptcy case or in the bankruptcy case of a relative, business associate, or corporation with which he or she is associated.
How do we start?
We file a case in the US District Bankruptcy Court where the debtor has lived for most of the last 180 days.
Can spouses file jointly?
Must spouses file jointly?
No. Your bankruptcy is your own.
What is the “Automatic Stay”?
It’s a Court order stopping all collection activities issued at the moment a Bankruptcy case begins.
They publish Chapter 7 filings in the newspapers, don’t they?
They used to, apparently, because people ask about this all the time. Filing bankruptcy is part of the public record, and anyone with login credentials to the Court website or the moxy to visit the Court can learn who has filed; however, our office has never actually seen a newspaper clipping with Chapter 7 filers listed. We’re sure they happen, or have happened, but it’s not something we’ve had to deal with.
Will my boss know?
Maybe. Sometimes we, or the trustee, need documents from your employer. Not always.
Does a person lose property by filing a chapter 7?
Ohio law allows debtors to keep most, if not all, of their property.
We have to go to court, don’t we?
About six weeks after filing, you’ll attend a hearing called the “meeting of creditors,” or “the 341.” You’re under oath. Creditors can question you, but they rarely, if ever, show up. The majority of bankruptcies require no further hearings.
What is a trustee in a chapter 7 case?
The trustee is hired by the court to collect the debtor’s nonexempt things, sell them, and pay the proceeds to creditors. The trustee has certain administrative duties in a chapter 7 case and is the officer in charge of seeing to it that the debtor performs the duties in the case. A trustee is appointed in every case.
May a utility company refuse to provide service to a debtor if the company’s utility bill is discharged under chapter 7?
No. It is illegal for a utility company to refuse to provide utility service if its bill for past utility services is discharged in the chapter 7 case. Sometimes deposits are required to continue service.
May a debtor repay a dischargeable debt?
Yes, you can “reaffirm” a debt by filing a “reaffirmation agreement.”
How long does a chapter 7 case last?
Usually, four to six months.
How are co-signors and other parties who may be liable to a creditor affected by a debtor’s discharge under chapter 7?
Anyone who has cosigned or guaranteed a debt for the debtor is still liable for the debt regardless of the debtor’s chapter 7 discharge.