Chapter 7 Bankruptcy

Chapter 7 is the chapter of the Bankruptcy Code that involves liquidation and is sometimes called “straight” bankruptcy. For the average person, a Chapter 7 bankruptcy is a fairly simple and quick proceeding. In most cases, it takes less than five months after filing for an individual to receive a discharge of debts. Some people believe the court will take everything they own when they file bankruptcy. This is not true.

The State of Ohio and the federal government provide generous exemptions that cover the majority of assets an average person owns (e.g., house, car, household goods, retirement accounts). If there is a chance you have an asset that may not be exempt, you may still have the option to file a Chapter 13 bankruptcy and retain your assets. The Jones Law Firm will thoroughly review your options with you before you file. Contact us today to schedule a free consultation.

Eligibility for Chapter 7 Bankruptcy

An individual is not eligible to receive a Chapter 7 discharge if that individual filed another Chapter 7 case within eight years prior to filing. If you have filed a Chapter 7 within the last eight years, you cannot file another Chapter 7 case. Some people choose to wait until the eight-year period is over to begin considering bankruptcy again. However, if you are not eligible because of a prior Chapter 7 filing, it is important to remember that you may still qualify to file a Chapter 13 bankruptcy, and there are several bankruptcy alternatives that can also provide relief. In addition, to qualify for a Chapter 7 bankruptcy, you must meet certain income requirements. This is called the “means test.” Put simply, your income must be below the median income in the State of Ohio to qualify for Chapter 7. During your initial consultation, we will analyze your income and determine whether you qualify for Chapter 7. Don’t worry — if you do not qualify for Chapter 7 because you fail the “means test,” you may still qualify to file Chapter 13.

Advantages to Filing Chapter 7 Bankruptcy

There are two major advantages that filing Chapter 7 bankruptcy can provide you: (1) the automatic stay, and (2) the discharge.

1. The Automatic Stay Stops Creditor Collections Immediately

As soon as you file your Chapter 7 bankruptcy petition, an automatic stay goes into effect. This immediately prevents creditors from starting or continuing any collection activity. This includes wage garnishment, home foreclosure, vehicle repossession, lawsuits, and creditor harassment (e.g., phone calls, letters, etc.). Once you file your case, you are well on your way to a financial fresh start.

2. Discharge of Most Forms of Debt Forever

At the end of your Chapter 7 bankruptcy case (usually between three and six months), you will receive a discharge. This is the main goal of every individual Chapter 7 case. Chapter 7 discharges most forms of debt. After you receive your discharge, creditors are legally prohibited from ever collecting on the discharged debt again. When you meet with The Jones Law Firm, we will make sure you know if you have any debt that may not be included in the discharge.

Credit Counseling

You must complete a credit counseling class prior to filing bankruptcy. During your initial consultation, we will provide you information about this course. The course usually takes less than an hour and can be completed online or over the phone. After completing credit counseling, you will receive a certificate of credit counseling that is valid for six months. Please contact us immediately after completing your course so we can schedule your appointment to sign your bankruptcy petition.

Filing Your Case

When you are ready to file your Chapter 7 case, we will schedule an appointment for you to sign your petition. We will provide you with a list of all documents and information you will need to provide our office before you file, as well as the information you will need to bring to your petition signing appointment. Some items that may be required include the following:

• Six months of paystubs
• Car title
• Proof of insurance (vehicle and homeowner’s)
• Deed and mortgage documents
• Bank statements
• Retirement account statements
• List of all your debts (**we can help you get your credit report)
• List of all your assets

Meeting of Creditors

Within about two months of filing your case, you will attend a meeting of creditors. This is a meeting conducted by your court-appointed trustee. Despite its name, creditors rarely attend the meeting. Although the meeting is conducted at the courthouse, it does not involve a judge. The meeting generally lasts less than 15 minutes. The trustee will ask you a series of questions about your bankruptcy petition. The main purpose of this meeting is to ensure the accuracy of the documents we prepared together. Don’t worry — we will thoroughly prepare you for this meeting. Some people are nervous about it but find after, that it is simple and quick.

Discharge

Usually, within a few months after filing, you will receive your discharge in the mail. This document certifies that you are no longer legally responsible for most of the debts you had prior to filing. Make sure to save a copy of this form. The Jones Law Firm will always be available, even after you receive your discharge, to answer any questions about your case. If a creditor tries to collect on a debt that was discharged in your bankruptcy case, call us immediately.

Myths about Filing Chapter 7 Bankruptcy

Many of the concerns that come with bankruptcy are often rooted in myth and general misunderstanding. The Jones Law Firm has chosen the most common myths in Chapter 7 bankruptcy filings.

I will have to give up everything I own after I file bankruptcy.

False. There are generous exemptions that allow you to keep most or all of your assets after you file bankruptcy. Plus, if you are current on your house and car payments, you can keep them if you want! If there is a possibility you may lose an asset in Chapter 7, we will let you know before you file — you may have the option to file a Chapter 13 instead and keep the asset.

I will have to appear before a judge.

In most cases, the only time you go to court is to attend your meeting of creditors. This meeting is conducted by your trustee (not a judge) and usually lasts less than 15 minutes.

Filing Chapter 7 will permanently ruin my credit.

While a Chapter 7 bankruptcy filing will appear on your credit report for up to 10 years, you can immediately start rebuilding your credit after you receive your discharge. The more time that passes, the less important the bankruptcy filing is on your credit report. Plus, every month you have a late payment or other negative credit activity, it is reflected on your credit report. When you receive your bankruptcy discharge, most of that negative credit reporting ends immediately. Think of it like ripping off a band-aid — you will be well on your way to rebuilding your credit!

Filing bankruptcy is expensive.

The Jones Law Firm offers very competitive rates. The attorney fees and court filing fees are usually a small fraction of the debt that gets discharged in bankruptcy.

I will lose my job if I file bankruptcy.

The federal Bankruptcy Code prohibits employers from negatively discriminating against an employee based solely on the fact that the employee filed bankruptcy. If you feel an employer has discriminated against you because you filed bankruptcy, call us immediately.

Free Consultation: Is Chapter 7 Bankruptcy Right for You?

If you are experiencing financial distress or the burden of debts you cannot pay, we encourage you to contact The Jones Law Firm for a free consultation about how we can help and whether Chapter 7 bankruptcy is right for you. With offices in Reynoldsburg, Ohio, The Jones Law Firm works with clients in and around Columbus and throughout central Ohio.