About 30 days after someone files a chapter 7, they will go to a meeting of creditors. Despite the name, the only creditor that usually shows up for meetings of creditors are the IRS if the person hasn’t filed their tax returns. Friends and family who the person had borrowed money from might also attend so they can ask questions, and sometimes, if someone belongs to a credit union, they might show up. The credit unions want to see if the person wants to stay in good standing with the credit union by continuing to pay debts they have with them, but these are the only creditors that usually attend.
There is a trustee appointed by the court at the meeting of creditors. His or her job it is to review all the paperwork and make sure it is all complete and accurate, and to see if the person has any assets he can take and sell to pay off the debts. The bankruptcy attorney’s job is to make sure the paperwork is all correct and that they do not have any problems at the meeting of creditors. He is there to make sure there are no assets that cannot be protected from the trustee in the chapter 7. If everything goes smoothly, the creditors will have 60 days to object to the discharge but if they do not do that, the person will get their discharge about 90 to 100 days after filing, which means they would not have to worry about all those debts anymore.
How Does Filing A Chapter 7 Case Affect Collection And Other Legal Proceedings Filed Against The Person In Other Courts?
Filing a chapter 7 creates the “automatic stay”, which automatically and instantly stops all creditors from trying to collect any debts from the person. Phone calls, sending letters, filing lawsuits, continuing lawsuits, obtaining judgments, garnishing the person’s paycheck and any kind of collection activity should be immediately stopped. This is the most powerful thing about a bankruptcy and is the reason most people come to see lawyers because they need immediate relief from their creditors. The only thing that bankruptcy will not stop is a criminal case, so if someone had some kind of criminal case like a DWI, the bankruptcy will not stop that case from proceeding.
What Is A Trustee In A Chapter 7? Who Is That Person And What Does That Person Do?
The bankruptcy court appoints a chapter 7 trustee and it is their job to review all the paperwork that the person files in the bankruptcy. They need to make sure it is complete and accurate, that the person has disclosed all of their assets and if there is anything they own that is worth any money. They actually get paid in two ways. First, they get paid a certain fee per case just for processing the case, and second they get paid a percentage of whatever they can collect and pay out to all the creditors. It’s their job to look for assets and things they can sell to pay off some of the debts.
The most common assets are cars that are paid for, tax refunds, business interests, equity in real estate, and jewelry. Lawsuits that the debtor has the right to pursue is another very common asset. If the person has the right to sue somebody, the chapter 7 trustee can actually step into that case and claim the money that the person had the right to sue for and they can pay that money out to the creditors. A person needs to be very honest and disclose anything they own of any value to the bankruptcy attorney, and make sure everything that is disclosed in order to protect it. Because if a person does not disclose it to the chapter 7 trustee and he finds out about it later, then it can’t be protected and the person would end up losing it. A common situation is bank accounts that are in the children’s names. Those also need to be disclosed. If someone has more than $5,000 in a bank account, Wells Fargo will actually freeze that money and report it to the Chapter 7 trustee. This issue came up a couple of times where people forgot to tell the lawyer about a bank account and they ended up losing that money to the chapter 7 trustee. When someone meets with their bankruptcy attorney, it is very important to disclose anything they own, any assets and any rights they have to sue anybody to make sure those can all be protected from the trustee.
What Are Some Indications That Chapter 7 Is Right For Me And The Lawyer I Hired Is The Right One For It?
A person should definitely find a lawyer who focuses in bankruptcy. Someone with a heart problem would go to a cardiologist not a general practitioner and it is the same with the legal profession. The legal profession is becoming more and more specialized so a person needs to find an attorney who can handle that kind of case.
The other thing is that a person does not want to make a decision about filing a bankruptcy and then hire an attorney. A person should talk to an experienced attorney and make the decision whether the bankruptcy makes sense or not. Sometimes there are options besides bankruptcy. We do debt settlements here because bankruptcy is a waste of time for people who only have a few thousand dollars in debts. It is like using a sledgehammer to kill a fly. Someone who does not have a lot of debts may want to consider doing debt settlement instead of filing for bankruptcy. The other thing is that they may have assets that can’t be protected in a chapter 7 so in that case they definitely need to talk to an experienced bankruptcy attorney to make sure they do not lose anything in a chapter 7 bankruptcy. A lot of times, people go to bankruptcy petition preparers or whatever and end up losing tax refunds and other property that could have been protected. If it can’t be protected then the person might not file the chapter 7 but it is better to make that decision before filing than after, because once a person files, they are stuck.
For more information on Legal Proceedings For A Chapter 7, a free initial consultation is your next best step. Get the information and legal answers you’re seeking by calling (410) 243-1508 today.