Chapter 7 Liquidation Bankruptcy

Chapter 7 Liquidation Bankruptcy

Bankruptcy Is About Starting Over.  Wipe out all that can be wiped out.  Start over with a clean slate.   The term Chapter 7 Bankruptcy comes from the federal statute that contains this particular section of the bankruptcy code. Lawyers call this form of bankruptcy "straight bankruptcy" because it cancels out most of your debts.   One of the primary purposes of bankruptcy is to discharge certain debts to give an honest individual debtor a "fresh start." The bankruptcy discharge has the effect of extinguishing the debtor's personal liability on dischargeable debts.  Although the filing of an individual chapter 7 petition usually results in a discharge of debts, an individual's right to a discharge is not absolute, and some types of debts are not discharged. For example, a bankruptcy discharge does not extinguish a lien on property - a mortgage on real property.   Chapter 7 Bankruptcies generally take from 3 to 6 months to complete and usually take only one trip to the court house.    Filing bankruptcy puts into effect the "automatic stay" The automatic stay immediately stops your creditors from trying to collect what you owe them. So, at least temporarily, creditors will not be able to go after your car, house or other property, or cut off your utility service or welfare benefits. Further, the automatic stay will stop most legal proceedings that may be running against you and will stop collection efforts.  Bankruptcy protection by the automatic stay will go into effect upon the filing of your bankruptcy. Thus, it will immediately prevent foreclosure, repossession of an automobile, and prevent a creditor from filing suit against you or continuing with a case.     Until your bankruptcy case ends, your financial problems will be in the hands of the trustee of the bankruptcy court. The court assumes legal control of the property you own (except for exempt property) and the debts that you owe as of the date you file. Nothing can be sold or paid without the court's consent. You have control, with a few exceptions, of property or income that you acquire after you file for bankruptcy.   A bankruptcy court operates through an appointed person called a "bankruptcy trustee." The trustee goes through the papers that you file with the court, asks you a few questions at a short hearing called a "creditors meeting." Creditors may attend this meeting, but rarely do.   After the meeting, the trustee collects the property that can be taken from you (your nonexempt property) to be sold to pay creditors. You can surrender the property to the trustee, pay the trustee its fair market value, or, if the trustee agrees, swap exempt property for nonexempt property. Very few people actually loose property in the bankruptcy.   If you have pledged property as collateral for a loan, the loan is called a secured debt. The most common examples of collateral are houses, and motor vehicles. In most cases, you will either have to surrender the collateral to the creditor or make arrangement to pay for it during and after the bankruptcy.    If you're a party to a contract or lease, and you or the other party still has obligations under it, the trustee may cancel it unless the contract will produce assets for the creditors. If it's canceled, you and the other party to the contract are cut loose from any contractual obligations.   If, after you file for bankruptcy, you change your mind, you can ask the court to dismiss your case. As a general rule, a court will dismiss a Chapter 7 bankruptcy case as along as the dismissal won't harm the creditors.   At the end of the bankruptcy process, most of your debts are wiped out by the court. You no longer legally owe your creditors. You can't file for Chapter 7 bankruptcy again for another six years from the date of your filing.  

BANKRUPTCY IS ABOUT STARTING OVER. 

BANKRUPTCY ATTORNEYS ARE ABOUT HELPING YOU GET STARTED AGAIN.

Cashman & Conner,LLP 972-445-1500

We hope the information provided here is helpful.  Please call our office with any questions you may have. Unless otherwise indicated, attorneys listed in this site are not certified by the Texas Board of Legal Specialization.  This web site is designed for general information only. The information at this site should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.

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