Chapter 7 - Liquidation

BANKRUPTCY

The Law Offices of Doustkam & Associates can help you achieve the financial freedom you need and the fresh start you deserve.  Our attorneys have a wealth of knowledge and experience in representing individuals and businesses in financial distress, which allows us to assist you in discharging those debts you can’t afford to pay.

During your FREE consultation, you will meet with one of our experienced bankruptcy attorneys who will explain your rights and will help you understand the process and consequences of a chapter 7 bankruptcy filing, thereby allowing us to help you manage your expectations during your case. 

At Doustkam & Associates, YOU are our utmost priority.  We work closely with our clients to take the confusion and stress out of the bankruptcy process, so that you can continue to live your life with the knowledge and confidence that your case is being handled properly.  

Have questions about Chapter 7 Bankruptcy?  Read below for more detailed information.  Or, you can contact us anytime for FREE consultation! 

Am I Eligible to File a Chapter 7 Bankruptcy?

To qualify for relief under Chapter 7 of the United States Bankruptcy Code, the filing debtor must be an individual, a partnership, a corporation, or other business entity.  Regardless of who you are, filing for chapter 7 bankruptcy can give you the fresh start you deserve.  While some debts are not dischargeable by law, we work closely with our clients from the start to help you understand what expectations you should have throughout the process. 

As an individual, in order to qualify for Chapter 7 Bankruptcy, you must satisfy “means testing.”  Means testing is a mathematical calculation used to determine whether an individual debtor qualifies for a Chapter 7 Bankruptcy based upon your income, the median income for your residential area, and certain “allowable expenses” established by the government.  After crunching the numbers, means testing determines whether you will have enough income over the next 5 years to repay your debts based on government standards.  If your income falls short of the government standards, then you qualify for Chapter 7. 

At Doustkam & Associates, our attorneys will crunch the numbers and will tell you whether you qualify for a Chapter 7 Bankruptcy during your FREE consultation making the process as painless and stress-free for you from the start.

Credit Counseling

The chapter 7 bankruptcy process begins with a mandatory credit counseling course which all debtors must complete before filing a bankruptcy petition.  The course can be taken online.  A list of approved courses can be found at the Department of Justice website.

The Chapter 7 Petition & Schedules

Once the debtor completes his or her credit counseling course, the next step in the process is the filing of a Bankruptcy Petition.  The Petition sets forth the debtor’s basic contact information as well as their estimated debts and estimated number of creditors.  The Court charges a filing fee of $299.00 for chapter 7 petitions.  The filing of the Petition imposes an “automatic stay” on collections which applies to all of the debtor’s creditors.  The automatic stay prohibits creditors from taking any collection actions against the debtors during the pendency of the case.

This means that once you file your Petition creditors cannot do anything to collect on your debts, including the sending of letters, telephone calls, foreclosure proceedings, filing or prosecution of lawsuits, etc.  Any creditor that continues with collection actions after the Petition is filed may be in violation of federal law and may be subject to penalties.  In other words, filing the chapter 7 petition will automatically stop the creditor phone calls, letters, lawsuits, or foreclosures.

In addition to the petition, debtors must also file a series of schedules setting forth, among other information, the following:  a list of assets, a list of expenses, a statement of income, a list of debts (including the names of all creditors and amounts owed), and other financial-related information.

Other lawyers will charge you attorney rates to have paralegals or legal assistants prepare and file your petition and schedules.  At Doustkam & Associates, ALL of your documents are prepared and reviewed by a licensed attorney with expertise in the applicable laws, rules, and regulations.  Other firms may also charge you additional fees to prepare and file any changes or amendments to your schedules.  If revised forms are required, Doustkam & Associates will prepare and file those forms at no additional cost!  

Chapter 7 Trustee & the 341(a) Meeting of the Creditors

Once your Petition and Schedules are filed with the Court, your case is assigned to a Chapter 7 Trustee.  The Trustee is a neutral party who is charged with the task of ensuring that your case is valid (i.e., that you haven’t committed fraud), and ensuring that your creditors get paid to the extent that your assets will permit. 

About 1 month after filing your Petition, the debtor and their attorney must appear at a 341(a) Meeting of the Creditors (also known as the “341(a) Hearing”).  At the 341(a) Hearing, the Trustee asks the debtor a series of questions regarding the information in their Petition and Schedules to make sure that everything is accurate.  Additionally, the 341(a) Hearing gives the creditors an opportunity to ask the debtor questions regarding their debts.

Many firms will hire an outside attorney (referred to as an “appearance attorney”) to appear with you at the 341(a) Hearing.  The appearance attorney does not work for the law firm you hired, and you will likely have never met or even seen this attorney! 

The 341(a) Hearing can be a stressful experience for debtors, which is why at Doustkam & Associates, you have ONE lawyer from start to finish, who will be there to guide and advise you at every step of the way.

Liquidation of Non-Exempt Assets

After the 341(a) Hearing, the Trustee will liquidate (i.e., sell) your non-exempt assets to pay off your debts.  However, the Trustee cannot sell “exempt assets”, since they are “exempt” from liquidation.  For example, an automobile is exempt from liquidation, meaning the Trustee cannot take your car to satisfy your creditors.  Often times, debtors can walk away from a chapter 7 bankruptcy without losing any property!

Once your non-exempt assets are sold, the proceeds are distributed to your creditors in order of their priority (some creditors get paid before others).  If you don’t have any non-exempt assets, or the value of your non-exempt assets do not fully satisfy the creditors, your remaining debt will be discharged.

Here’s a simple example:  Let’s assume you have $100,000 in unsecured credit card debt, you rent an apartment, and you own a car.  Other than clothing and furniture, you don’t own any other significant assets.  Further assume you earn $5,000.00 per month and your monthly expenses are $5,500.00 per month.  Here, you are spending more money each month than you are earning, so there is no income from which to pay your creditors.  Additionally, you have no non-exempt assets that can be sold to satisfy the creditors.  In this basic situation, there is no money to pay your creditors, so the $100,000 in credit card debt is discharged and you will no longer owe that debt when your case is finished. 

Debtor Education

Before the Court will discharge your debts, each debtor is required to complete an approved “debtor education” course.  Similar to the credit counseling course, debtor education is meant to provide you with the tools to make the best use of your fresh start.  The course will teach you how to manage a budget, use credit wisely, and generally how to avoid a future bankruptcy filing.

At Doustkam & Associates, most of our chapter 7 bankruptcy services are on a one-time flat fee basis.  Contact us today for your FREE consultation and let us help you take the first step towards financial freedom!