Chapter 7
HOW IT WORKS
In a Chapter 7 bankruptcy, the debtor files a
petition with the bankruptcy court serving the area where
the individual lives or where the business debtor is
organized or has its principal place of business. 
In addition to the petition, the debtor must also file: schedules of assets and liabilities; a schedule of current income and expenditures; and a statement of financial affairs. Individual debtors with primarily consumer debts must also file: a certificate of credit counseling; evidence of payment from employers; and a statement of monthly net income and expenses. A husband and wife may file a joint petition or individual petitions. Even if filing jointly, a husband and wife are subject to all the document filing requirements of individual debtors.
In order to complete the forms that make up the
petition, the debtor must provide the following
information:
1.
A list of all creditors and the amount and nature of
their claims;
2.
The source, amount, and frequency of the debtor's
income;
3.
A list of all of the debtor's property; and
4.
A detailed list of the debtor's monthly living expenses,
i.e., food, clothing, shelter, utilities, taxes,
transportation, medicine, etc.
Filing a Chapter 7 petition "automatically stays"
(stops) most collection actions against the debtor or
the debtor's property. The stay arises by operation of
law and requires no judicial action. While the stay is
in effect, creditors generally may not initiate or
continue lawsuits, wage garnishments, or even telephone
calls demanding payments. Creditors receive notice of
the filing from the bankruptcy clerk.
Debtors must cooperate with the trustee and
provide any financial records or documents that the
trustee requests. The Bankruptcy Code requires the
trustee to ask the debtor questions at the meeting of
creditors (341 Hearing) to ensure that the debtor is
aware of the potential consequences of seeking a
discharge in bankruptcy. These include: the effect
on credit history; the effect of receiving a discharge;
and the effect of reaffirming a debt. Bankruptcy judges
are prohibited from attending the meeting of creditors
in order to preserve their independent judgment.
DISCHARGE
A Chapter 7 discharge releases the debtors from
personal liability for most debts and prevents creditors
from taking collection actions against the debtor.
Debtors can retain certain secured property (such
as an automobile), if they decide to "reaffirm" the
debt. A reaffirmation is an agreement between the
creditor and debtor where the debtor remains liable for
the debt and pays all or a portion of the money owed,
even though the debt could be discharged in the
bankruptcy. Debtors must decide to reaffirm a
debt, before the discharge is entered.
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Broward County - Miami-Dade County - Palm Beach County