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Chapter 7

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CHAPTER 7 is designed for individuals, married couples, and small businesses wishing to restructure their current financial position. Businesses come in all forms such as partnerships, corporations, or limited liability companies.

A consumer debtor files relief from creditors under Chapter 7 and is typically permitted to keep most or all of his or her property through exemptions. However, if the property exceeds the limits, any remaining non-exempt property is available for distribution by the Bankruptcy Trustee to satisfy creditors.

At the end of the Chapter 7 case, the debtor receives a discharge, this cancels the debtor’s legal obligation to pay most consumer debts that are outlined in the petition and associated schedules. A discharge is available only once every six years.

 

The case begins with the filing, under oath, of a petition, schedules and other associated exhibits. The filing fee for a Chapter 7 case is $299.00. This is set by statute. Upon the filing of the petition, a trustee is appointed by the Office of the United States Trustee to administer and investigate the case, question the debtor about schedules and liquidate any assets.

We need the following preliminary information from our client in order to complete the bankruptcy petition:

 

  • A schedule of all creditors and collection agents (including agenceis, attorneys and law firms), containing complete addresses, account numbers, amounts claimed due, and dates each debt was incurred;
  • A schedule of all property; and
  • The amounts of monthly income and all expenses including but not limited to medical, life, automobile, and homeowners insurance, food, clothing, maintenance, mortgages or rent, etc.

 

There is certain exemptions that may or may not apply depending on whether the Pennsylvania law or federal exemption law is applied.

 

Once the petition is filed, all calls from creditors must stop and a meeting of creditors will be scheduled by the court.

 

DISCHARGE

 

Approximately three months following the meeting of creditors, the debtor can reasonably expect to receive discharge. The discharge is a court order which cancels the debtor’s legal obligation to repay most of the unsecured debt. Certain debts that are secured or taxes or student loans will not be discharged in most cases. Bankrutpcy fraud is a felony under federal criminal law, and carries serious penalties including fines or imprisonment, or both, in addition to the denial of the discharge.