Chapter 7 Bankruptcy
The purpose of Chapter 7 is to provide a legal process to allow the honest but unfortunate debtor relief from debt. There is not a scheduled payment plan in a Chapter 7 case. Thus, upon completion of the case requirements, the debtor is granted a discharge. Chapter 7 is available to those who, after basic living expenses, home and automobile payment, taxes and support, cannot afford to pay existing obligations on credit cards, payday loans, internet loans, and other debts. The income and expenses of the debtor is an important, but not the sole, consideration in determining whether one qualifies for Chapter 7 relief.
In Chapter 7, the debtor(s) are allowed to protect and retain, in most cases, their home and certain personal property. Such retained property is called exempt property. There are certain limitations and qualifications of what is determined to be exempt. Exemptions are based on State and Federal law. Nevada has some of the most generous exemptions in the nation. Sometimes, debtors are allowed to buy non-exempt property from the Bankruptcy Estate.
In most cases, a Debtor is able to completely eliminate credit card, payday loan, internet loan, lawsuits, medical debts and most other consumer debts. Some debts are generally not eliminated in bankruptcy and survive, such as domestic support, criminal and traffic fines, debts by fraud. Still yet other debts need to be examined to determine whether such will be eliminated, such as taxes and student loans.
Debtors are required to complete two online courses. 1.) Credit Counseling – completed prior to the filing of Bankruptcy; 2.) Financial Management – completed within 60 days after the filing of Bankruptcy.
Debtors are required to attend a hearing called the §341 Meeting of Creditors. There the Bankruptcy Trustee will verify the identity of the debtor and question the debtor regarding the filed bankruptcy schedules. Such hearing is conducted under oath, and therefore, debtors should be familiar with the schedules, statements and other documents filed in the case.
Upon successfully completing all of the Bankruptcy requirements, the debtor can expect to receive a discharge approximately 60 something days after the §341 meeting of creditors. The discharge releases the debtor from the bankruptcy case, and all of the dischargeable debts are eliminated. The Debtor now has a financial fresh start.