Using Chapter 7 Bankruptcy? Know What To Expect

In the process of filing for bankruptcy? You likely will have the following five questions to know what you should expect. 

Who Can File For Bankruptcy?

Chapter 7 bankruptcy is designed for individuals. However, you can use Chapter 7 bankruptcy as either an individual or a couple filing together.  This will help get rid of any debts that are owned by both parties, as well as debts owed by each of you as individuals. There is no need to file for two separate bankruptcy proceedings if you and your spouse are going through financial troubles together. 

What Is The Order Of Relief? 

Once you file your bankruptcy case, an order of relief can be sent to all of your creditors to let them know about the bankruptcy filing. This gives your creditors deadlines to take action about several key items in the bankruptcy filing. They'll know the day by which they can make objections to the bankruptcy filing, and the date of any meetings so they can attend and ask questions.  

What Happens With Your Physical Assets?

Many people that use Chapter 7 bankruptcy have concerns about what will happen to their physical assets, such as their home and vehicle. You may be able to hold onto some of these assets, or at least retain a significant portion of the value of them. However, this largely depends on if you have missed payments and if you intend to continue paying off the asset over time.

It is very important that you stay on top of payments for any large asset that you wish to keep. If you have fallen behind on payments, you may have no choice other than to sell the assets and use your exemptions to get back a portion of what you have paid towards them. If you want to set up a repayment plan for missed payments so that you can get caught up, you may be better off using Chapter 13 bankruptcy, which has that repayment plan option.

Can You Selectively Pay Back Creditors?

Do you owe a specific creditor money and want to ensure that they get the money they are owed? Know that this is not allowed during bankruptcy. If the bankruptcy court discovers that you have paid back any creditor with a personal preference, even before you file for bankruptcy, that payment will be redacted back from the creditor. This is considered preferential treatment. The money must be evenly distributed among all creditors.

Contact a bankruptcy attorney, such as C. Taylor Crockett, P.C. for more information.