Chapter 7 Bankruptcy: Liquidation of Assets
When people are facing mounds of debt and start to consider bankruptcy, Chapter 7 is often the first place they look. Under a Chapter 7 Bankruptcy filing, many and most debts will be “discharged” upon completion of the case. While there are exceptions to how much and what kinds of debt you can discharge (more on this later), Chapter 7 is a helpful “reset” and “fresh start” to get out from under credit card debt, medical bills, collections, and more!
Waukesha Chapter 7 Bankruptcy Attorneys: Do I need an Attorney?
While it is not required that you have an attorney to file bankruptcy, it is highly recommended. Studies have shown that your chances of getting a discharge are far greater when you use an attorney. Furthermore, attorneys such as McAvoy & Murphy can help take the immense stress and emotional toll out of what otherwise can be a very complex process. When an individual is staring down tens to hundreds of thousands of dollars in mortgage arrears, car loans, medicals bills and credit card debt, hiring an attorney can be a worthwhile investment.
What does a Waukesha bankruptcy lawyer need to know about my situation?
The attorneys at McAvoy & Murphy can only decide if Chapter 7 Bankruptcy is right for you after meeting with you to discuss your situation at the initial consultation. Bankruptcy is not a blanket solution: It is only a “tool in the toolbox” our lawyers use for debt relief. However, you can take action to make sure you are well prepared for an initial consultation by bringing the following documents:
- Your tax returns, both federal and state, from the past 2 tax years. These will be required by the trustee (more on who the trustee is and what he does later) when you have your court appearance. They also will help the attorney assess your income situation for the petition.
- Past 6 months pay-stubs from your employer(s). These documents are necessary to help the attorneys determine whether or not your monthly income is low enough to qualify for a Chapter 7. The easiest way to qualify for a Chapter 7 discharge is if your monthly income is lower than the Wisconsin median income. For the median household incomes for family sizes in Wisconsin, see the IRS website. https://www.justice.gov/ust/means-testing
- Any bills or mailings from creditors that you wish to be discharged in the Bankruptcy. McAvoy & Murphy will pull your credit report once you become a client, but sometimes creditors aren’t yet listed with the credit bureaus due to a multitude of reasons. If you know you owe a debt and have paperwork, bring it to the consultation to ensure the debt is listed and discharged.
- Car Titles for vehicles you or anyone is your household owns. One of the biggest questions our bankruptcy attorneys get is, “Will they take my car?” That is why it is important for our attorneys to know a vehicle is involved in the case so they can plan ahead and protect your interest in your vehicle.
- Recorded copies of all mortgages and deeds. If you are a homeowner with significant equity, federal exemptions may not be enough to protect your No. 1 investment. Wisconsin has state exemptions specifically for its residents that may further protect your equity. Our attorneys will figure out which set of exemptions will work best for your situation and apply them accordingly.
While McAvoy & Murphy understands these documents may not be available to most people right away, keep in mind that while these documents are recommended for the initial consultation, they are not necessary. Before filing, we will need these documents and will have up to within seven days of your first meeting of creditors to submit these documents to the trustee. If you work with McAvoy & Murphy, your attorney will clearly outline the timelines so that you know exactly what information you need to collect and what date the information is needed by in order for you to receive your discharge
What are the Steps in a Typical Chapter 7 Bankruptcy Case?
- Step One. Filing the petition: For the typical Chapter 7 case, the bankruptcy case starts with the filing of the petition. These petitions average about 60 pages and will be completed by your attorney if you have one. The petition includes the main petition along with the bankruptcy schedules, statement of financial affairs, and statement of your monthly income. If you are reading this outline and trying to file bankruptcy on your own, you can find a link to the forms here. The following documents are the minimum requirements in a bankruptcy petition:
- B101: Voluntary Petition for Individuals Filing for Bankruptcy.
- Certificate that you have completed Credit Counseling from a court-approved agency.
- Filing fee of $335(or petition to pay in installments, or have the fee waived).
- Statement of your social security number.
- Creditor Matrix.
- Please note that these are the bare minimums for filing, and simply filing the bare minimums is NOT recommended. The bulk of the petition is in filling out the schedules and statement of financial affairs, and if these documents are not filed with the petition, they are due within 14 days of the filing date.
- Step 2. The Meeting of Creditors A.K.A. 341 Hearing: After the filing of the petition you will be assigned a trustee, who will analyze your petition to determine if you have any assets that can be seized. This is where it is imperative that your attorney makes sure your property is properly exempted, otherwise the trustee will seize the asset(s) and sell it to pay off your creditors. You will be scheduled to meet with you bankruptcy trustee at least once during your bankruptcy case (in most cases, there only will be one meeting). This meeting will be used to determine if the schedules accurately describe your assets and your debts, and if there has been any change in your circumstances since the petition has been filed. These meetings typically take 5-10 minutes and are standard questions asked of anyone filing for bankruptcy. However, the trustee may uncover something that was not disclosed, or ask more detailed questions about a part of the petition he finds of interest. This is why a good bankruptcy lawyer can do more work on the front end before filing the petition itself, making the meeting of creditors a stress and hassle-free experience. On a final note, make sure you bring your social security card and a valid government identification to the meeting. Failure to bring these items will mean that your case is delayed, or even dismissed.Another possible part of the First Meeting would be if a creditor for one of your debts wished to appear at the meeting and ask you questions regarding that specific debt. Creditors usually send an attorney to the meeting to ask questions regarding if the property is recoverable, if the debt is still dischargable, and why there have been no arrangements to create a payment plan (among other reasons). A creditor showing up to your meeting of creditors is rare and one should not lose sleep over the prospect of this happening. Your bankruptcy attorney will explain these scenarios in detail at your initial bankruptcy consultation.
- Step 3. From 341 meeting to discharge: After your 341 meeting, a couple different scenarios play out. If the trustee finds that all assets are exempt and your petition accurately reflects your assets and liabilities, he or she will file what is known as a “report of no distribution.” This will essentially mean that the trustee conducted his examination, there are no assets to distribute, and that he or she will not take further action regarding your case. If the trustee adjourns your 341 meeting, this is because the trustee has found a discrepancy in your petition with your testimony, and is giving your attorney time to correct this. Appearance at the adjourned meeting of creditors is not necessary unless the trustee specifically tells you that they wish for you to reappear. If your case is adjourned, don’t be worried- most adjourned cases still receive a discharge. It is just a procedural matter in order to gain additional matter or correct conflicting information, so that there are not issues after the case finally closes. Be sure to complete the Second Debtor Education course 60 days after the initial date set for the First Meeting of Creditors. At McAvoy & Murphy Law Firm, your debtor education course will be bought for you along with your first credit counseling course as part of your flat fee for a Wisconsin Chapter 7 Attorney. At McAvoy & Murphy, we believe that you shouldn’t be nickeled and dimed for your bankruptcy- our Waukesha lawyers will quote you a rate that includes all fees except the court fee! If you do not complete the second debtor education course within 60 days of your Meeting of Creditors, your case will not receive a discharge, and reopening a closed case can be costly.You should receive your discharge papers in the mail anytime after 60 days has past from your 341 meeting. At this point, it would be wise to contact your Wisconsin bankruptcy lawyer and have short conversation regarding possible educational courses or classes, as well as credit monitoring services that may be available to you so you don’t repeat your debt troubles. Once you receive a chapter 7 discharge, you won’t be able to file chapter 7 again for another 8 years, and creditors may try to take advantage of that fact. After you receive your discharge, your case will be closed and your journey through the bankruptcy process will be complete. McAvoy & Murphy will take the chance out of your Chapter 7 filing and replace luck with peace of mind. After all, who needs luck when you have good Irish attorneys?
Do not go at this alone! Schedule a free consultation today by calling 844-ZAP-DEBT!