Bankruptcy is something which is not to be taken lightly. The one thing that most people know about bankruptcy is that it will have a long term impact on credit availabilitssy, other than that most people are not aware of or fully understand the types of bankruptcy that are available.
There is little doubt that filing for Chapter 7 bankruptcy is most common. Chapter 7 bankruptcy is often called “liquidation” bankruptcy as it involves the identification and disposal of all the petitioners’ non-exempt assets. The sale of these assets is conducted by a trustee that is appointed by the bankruptcy court; the usual disposal method is through public auction. Once the assets have been converted into cash, the money is paid to the creditors to the extent possible after which any remaining debt is absolved.
Before filing for bankruptcy the debtor should hire a Salt Lake City bankruptcy attorney. An attorney will work very closely with his or her client helping to gather and process all the records and documentation expected by the bankruptcy court when filing a petition for Chapter 7. The petitioner must provide a complete and accurate list of all debts and non-exempt assets. This financial statement and asset list must include current bank balances, total credit card debt, documents supporting a loan and if applicable, proof of income. These documents are mandatory as the court cannot proceed with the petition if it does not have proof of the petitioner’s financial situation.
As well as providing all the financial details and records of the petitioner the individual will be subjected to a means test. The test determines whether the petitioner is in a position to repay the debts or not. The test uses the last six months of pay stubs and annualizes the income; the result of the test is compared to the median income in the jurisdiction where the petitioner resides. In the event the petitioner does not pass the means test he or she may be forced to declare Chapter 13 bankruptcy.
If the test results are such that Chapter 7 can be filed the court sets a date when the petitioner and the creditors meet. During this meeting the debtor and his or her Salt Lake City bankruptcy attorney confirm under oath that all the information included in the petition to the court is accurate and true, if the creditors have any questions for the debtor they can be asked at this time.
Once the non-exempt assets have been taken into the care of the administrator they are sold and the proceeds distributed as divulged in the creditor meeting and agreed. Once the distribution has been made the debtor is discharged. Once the debtor is discharged any attempts by creditors to collect the remaining debt is prevented, in essence, Chapter 7 bankruptcy is like starting with a clean slate.
If you are contemplating filing for Chapter 7 bankruptcy then you are invited to discuss the procedures and consequences with a Salt Lake City bankruptcy attorney. You are invited to contact the Law Office of Andrew B. Clawson, PC.
