CHAPTER 7 BANKRUPTCIES

1. What is the difference between a chapter 7 and chapter 13 bankruptcy?
In a chapter 7 bankruptcy, debtors are granted a discharge from debts after a few months and no monthly payments are required to be made to the bankruptcy trustee. In a chapter 13 bankruptcy debtors are discharged from their debts after making monthly payments to a court appointed trustee for a 3 to 5 year period.

2. How much debt is required to file for a bankruptcy?
There is no minimum amount of debt required to file for bankruptcy. In most cases, debtors should not file for bankruptcy if their dischargeable debt is less than $7,500.00.

3. If a prior chapter 7 bankruptcy was filed and discharged how long does a debtor have to wait to file another chapter 7 bankruptcy?
8 years from the filing date.

4. If a debtor is married does he or she have to file bankruptcy with the spouse?
No. A married debtor can file jointly with their spouse or can file a separate single bankruptcy in his or her name only.

5. Are the names of persons who file chapter 7 cases published?
When a chapter 7 case is filed, it becomes a public record and the names of the persons filing may be published by some credit-reporting agencies. However, newspapers do not usually report or publish the names of consumers who file chapter 7 cases.

6. How does a bankruptcy filing affect lawsuits that have been filed to collect debts?
The filing of any kind of bankruptcy automatically stops any lawsuit from proceeding to collect a debt. If a discharge is granted, lawsuit debts are discharged along with other debts.

7. What is the affect of a discharge in a bankruptcy?
It is a court order releasing a debtor from all of his or her dischargeable debts and ordering the creditors not to attempt to collect them from the debtor. A debt that is discharged is a debt that the debtor is released from and does not have to pay.

8. What debts are not discharged in a bankruptcy?
All debts of any type or amount, including out-of-state debts, are dischargeable in a chapter 7 case except for the types of debts that are by law nondischargeable in a chapter 7 case. The following is a list of the most common types of debts that are not dischargeable in a chapter 7 case:

1. Most tax debts and debts that were incurred to pay nondischargeable federal tax debts.
2. Debts for obtaining money, property, services, or credit by means of false pretenses, or a false financial statement, if the creditor files a complaint in the bankruptcy case.
3. Debts not listed on the debtor’s chapter 7 forms, unless the creditor knew of the bankruptcy case in time to file a claim.
4. Debts for fraud, embezzlement, or larceny, if the creditor files a complaint in the bankruptcy case.
5. Debts for domestic support obligations, which include debts for alimony, maintenance, or support, and certain other divorce-related debts, including property settlement debts.
6. Debts for intentional or malicious injury to the person or property of another, if the creditor files a complaint in the bankruptcy case.
7. Debts for certain fines and penalties.
8. Debts for most educational benefits and student loans, unless a court finds that not discharging the debt would impose an undue hardship on the debtor and his or her dependents.
9. Debts for personal injury or death caused by the debtor’s operation of a motor vehicle, vessel or aircraft while intoxicated.
10. Debts that were or could have been listed in a previous bankruptcy case of the debtor in which the debtor did not receive a discharge.

9. Who is eligible for a chapter 7 discharge?
Any person who is qualified to file and maintain a chapter 7 case is eligible for a chapter 7 discharge except the following:

1. A person who has been granted a discharge in a chapter 7 case that was filed within the last 8 years.
2. A person who has been granted a discharge in a chapter 13 case that was filed within the last 6 years, unless 70 percent or more of the debtor’s unsecured claims were paid off in the chapter 13 case.
3. A person who files and obtains court approval of a written waiver of discharge in the chapter 7 case.
4. A person who conceals, transfers, or destroys his or her property with the intent to defraud his or her creditors or the trustee in the chapter 7 case.
5. A person who conceals, destroys, or falsifies records of his or her financial condition or business transactions.
6. A person who makes false statements or claims in the chapter 7 case, or who withholds recorded information from the trustee.
7. A person who fails to satisfactorily explain any loss or deficiency of his or her assets.
8. A person who refuses to answer questions or obey orders of the bankruptcy court, either in his or her bankruptcy case or in the bankruptcy case of a relative, business associate, or corporation with which he or she is associated.
9. A person who, after filing the case, fails to complete an instructional course on personal financial management.
10. A person who has been convicted of bankruptcy fraud or who owes a debt arising from a securities law violation.

10. How long does a chapter 7 last?
A successful chapter 7 case begins with the filing of the bankruptcy forms and ends with the closing of the case by the court. If there are no nonexempt assets for the trustee to collect, the case will most likely be closed shortly after the person filing receives his or her discharge, which is usually about four months after the case is filed. If there are nonexempt assets for the trustee to collect, the length of the case will depend on how long it takes the trustee to collect the assets and perform his or her other duties in the case. Most chapter 7 consumer cases with assets last about six months, but some last considerably longer.