Question

Describe the Chapter 7 Bankruptcy process and what a Debtor must provide and complete oto receive a bankruptcy discharge.

Answer 1

The Chapter 7 bankruptcy process consists of the following steps:

(i) Get the compulsory credit counseling – Prior to filing for Chapter 7 bankruptcy one has to receive credit counseling for a six months period. Counseling should be sought from an agency that has been approved by the U.S. Trustee’s Office.

(ii) Filing of petition and other forms – The forms will include bankruptcy petition, several schedules listing financial information, list of income and expenses.

(iii) The trustee takes over – Court appoints a trustee and this trustee will handle your bankruptcy case.

(iv) Eligibility to file for Chapter 7 is confirmed – The Trustee decides on your eligibility for Chapter 7 protection. To be declared eligible you will have to pass the mean tests in which a comparison of your income to expenses will be done to determine if you could afford a Chapter 13 repayment plan or not.

(v) Handling of nonexempt property – Trustee will decide if the nonexempt property is worth seizing and selling and then if it can be distributed to the creditors or not.

(vi) Dealing with secured debts – For secured debts the property must be given back and redeemed.

To receive a bankruptcy discharge a debtor has to follow the above steps carefully. Thus the debtor is required to keep or produce adequate books or a financial record, explain satisfactorily any loss of assets, obey a lawful order of the bankruptcy court, and has completed an approved instructional course concerning financial management.

If all the above mentioned steps are followed properly then the debtor will receive a discharge from three to six months after filing for the same.