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Chapter 7 Fresh Start Bankruptcy
Chapter 7 of the Bankruptcy Code also provides for “liquidation,” which means that the debtor’s property is sold, and the proceeds are distributed to the debtor’s creditors, to satisfy debts. However, under Chapter 7, certain of the debtor’s property – such as a car and personal property – may be “exempt” and protected from being sold. Additionally, if your home has no equity (meaning the balance you owe on your mortgage or liens is greater than the home’s value), it is “safe” in Chapter 7 bankruptcy. Our experienced bankruptcy lawyers will work with you to allow you to keep your home and keep your car.
In many Chapter 7 Bankruptcy cases, the debtor often has little or no property, except what is “exempt”. So often in Chapter 7 cases, there may not even be an actual liquidation of the debtor’s assets. These cases are called “no-asset cases.” The debts are just “wiped out” – and that is the end of it!
Chapter 7 Bankruptcy is attractive to many debtors because there is no future liability for any discharged debts. It is important to note, however, that part of the debtor’s property may already be subject to liens and mortgages that pledge the property to other creditors. To understand how your lien or your mortgage is affected by a Chapter 7 bankruptcy you should talk to an experienced bankruptcy lawyer who can look at your individual situation.
Also, although an individual Chapter 7 case usually results in a discharge of most debts, the right to a discharge is not absolute. This means that some types of debts are not “dischargeable” in bankruptcy. There are a limited number of certain debts that cannot be discharged in Chapter 7 bankruptcy. Generally, taxes, most student loans, child support & liens on property are NOT discharged in Chapter 7.
WHO IS THE BANKRUPTCY TRUSTEE?
When you file for Chapter 7 or Chapter 13 bankruptcy, the court will appoint a trustee to oversee your bankruptcy filing. At The Law Office of Toma Makedonski in Northwest, Indiana our clients often have questions about the role of the trustee. We offer the following general information regarding bankruptcy trustees, to help you know what to expect during bankruptcy. With assistance from one of our experienced affordable Northwest Indiana, bankruptcy attorneys, the process can be relatively straightforward and efficient.
THE ROLE DIFFERS, DEPENDING ON THE CHAPTER
Because Chapter 7 and Chapter 13 are different, the role of the trustee is different for each. During Chapter 7 bankruptcy, the trustee will first determine eligibility and confirm that all documents filed with the court are accurate and complete. It is also the trustee’s job to investigate your financial affairs and uncover any funds that can be used to pay creditors. If you have any nonexempt assets, your Chapter 7 trustee will manage the sale of those assets to pay off some of your debt.
In a Chapter 13 bankruptcy, the trustee will oversee the creation of your repayment plan, ensuring it is reasonable. The Chapter 13 trustee will also coordinate and document all payments to your creditors.
Typically, you will only meet with your trustee once at the meeting of creditors. Following this meeting, your lawyer at The Law Office of Toma Makedonski, will communicate with the trustee throughout the rest of the bankruptcy process.