Chapter 7
Chapter 7
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy discharges unsecured, non-priority debts like credit cards, medical bills, payday loans, etc. Chapter 7 does not discharge priority debt such as taxes or domestic support obligations like child support or alimony. Secured debt like a mortgage or car loan will also be discharged but you can still keep the property if you redeem the property or reaffirm the loan and continue to make the payments. You can, however, discharge your obligation on a mortgage or car loan if you also surrender the property.
Most people do not lose any property in a Chapter 7 bankruptcy. Each state provides exemptions that protect certain amounts of certain types of property. Missouri and Kansas both allow you to protect some, if not all, of your home, primary vehicles, retirement, clothes, furniture, etc. Your attorney can advise you regarding your own situation.
Why do I need a bankruptcy attorney in Missouri?
- Realistic expectations.
- Guided and Aligned
- Your Best Advocate
Basic steps in filing a Chapter 7 bankruptcy
Secure your finances by taking proactive steps
Analyzing your debt and circumstances
First, you must know which of your debts can be discharged by Chapter 7 bankruptcy filing and which will not. Per the Bankruptcy Code, dischargeable debts include medical bills, credit card debt, car leases, personal loans, and some membership premiums. In contrast, non-dischargeable debts are those of spouse and child support, most student loan debt, and recent tax debt.
Finding out if you have exempt property
In most cases, Chapter 7 filers are able to keep household appliances, furniture, clothes, certain business tools, some home and car equity, and prescribed medical equipment. If you don’t know which of your assets will be taken away by the Chapter 7 process, ask your Kansas City, MO lawyer about bankruptcy exemption laws. These laws can protect your property from being sold without a fight.
Determining your Chapter 7 eligibility
You can do this by taking and passing the Chapter 7 Bankruptcy Means Test where your gross monthly income during the last 6 months before filing will be multiplied by two, and then compared to Missouri’s median income. In order to pass the means test, your gross monthly income has to be less than or equal to the state median.
Going through credit counseling
One of the requirements before Chapter 7 Bankruptcy filing is for you to complete a credit counseling course within 180 days of submitting your bankruptcy petition. You have the option to attend the class either in person or virtually. Credit counseling should be given by an agency approved by the bankruptcy court. The filer may be allowed to take the course shortly AFTER the 180 days, but only when certain exceptions are met. Talk to a seasoned Kansas City bankruptcy lawyer for additional information.
Filling out required Chapter 7 bankruptcy Forms
When you fill out the bankruptcy forms needed for your petition, you must inform the Bankruptcy Court about the totality of your circumstance. That includes all debts, expenses, property, income, and any other useful details. Make sure, to tell the truth about every detail you put in each Chapter 7 bankruptcy form. Additionally, you will pay a filing fee which the Bankruptcy court either allows you to pay in 4 installments or waive entirely. Fill out all forms in the presence of your Kansas City bankruptcy lawyer, if possible.
Submitting all necessary paperwork and meeting with the Chapter 7 trustee
The Chapter 7 bankruptcy trustee will be tasked to verify the accuracy of everything you wrote in the bankruptcy forms and other documents you included. During the 341 meeting of creditors, the Chapter 7 trustee will also verify your identification. Talk to your Missouri bankruptcy attorney about the duties a trustee performs during Chapter 7 and anything else about how to file Chapter 7 bankruptcy Kansas City MO.
Facing financial trouble?
Chapter 7 FAQs
There can be no specific answer to this question unless an experienced bankruptcy lawyer evaluates your circumstances. The answer is always dependent on your specific financial situation. The decision to file for bankruptcy is serious, and consulting with a knowledgeable lawyer is important.
Chapter 7 bankruptcy can eliminate almost every type of unsecured debt that you have. A collateral property does not guarantee these types of debts. For instance, car loans are deemed secured debt guaranteed by the vehicle; mortgages are deemed secured debt guaranteed by the home. Unsecured debts eliminated by Chapter 7 bankruptcy may encompass medical bills, credit card debt, and gasoline card debt.
However, it is not guaranteed that filing chapter 7 bankruptcy will eliminate all your debts, like spousal and child support or student loans. These types of unsecured debt are not dischargeable. Other types of debt may be nondischargeable if the creditor disagrees, such as recently acquired debts for luxury goods, fraud, and tax debt in the past three years.
You are given bankruptcy protection as soon as your petition for bankruptcy is filed with the Clerk’s office and a case number is assigned to it. Your filing of a bankruptcy petition constitutes an automatic stay of most legal actions that can be taken against you or your property. Most lawsuits against you will not proceed once the petition is filed. Creditors can only continue or pursue collection activities legally if they obtain a court order.
