Questions that are frequently asked by our Chicago area clients about Chapter 7 Bankruptcy.
What is Chapter 7 Bankruptcy?
Chapter 7 is the legal process of obtaining a fresh start and eliminating debt.
What debts can be eliminated in Chapter 7?
Most types of debts. Some common exceptions are student loans and parking tickets, both of which Chapter 7 cannot eliminate.
How long will I be in Chapter 7?
The average amount of time the case will be open is three and one-half months from the filing date.
How long does it take to file for Chapter 7?
After you give us your documents and complete your online credit counseling, we can usually file your case within 3 business days or less.
Can I keep what I own in Chapter 7, including my house/car?
Yes, almost always. If there is a possibility of losing an item in the bankruptcy, we will warn you in advance of filing your case.
What is the difference between Chapter 7 and Chapter 13?
Chapter 13 is a debt consolidation, whereas Chapter 7 is for debt elimination. Chapter 13 can also eliminate debt, but not until the end of the payment plan.
Is there a minimum or maximum amount of debt for Chapter 7?
No. But if you have too little debt, Chapter 7 may not be the best option for you. Ask us at your consultation.
Do I make too much income to file Chapter 7?
This depends on your total income for the last 6 months, on your household size, and on your expenses. We can almost always determine your eligibility at the initial, free consultation.
What is the disadvantage of filing for Chapter 7?
The case will be reported on your credit for 10 years. You also must report all of your items of value (assets) to the bankruptcy court. In unusual cases, assets can be sold in Chapter 7 bankruptcy.
What materials do I need to provide to file for Chapter 7?
Proof of income and the last 2 income tax returns that you filed. You will also need to complete a pre-filing credit counseling course.
I filed bankruptcy in the past. Can I file again?
If you filed Chapter 7 more than 8 years ago, you can file Chapter 7 again now. If you filed Chapter 13 before, and you did not finish it, you can file Chapter 7 now. If you filed Chapter 13 more than 6 years ago, and finished the plan, you can file Chapter 7 now.
What courses are required for my Chapter 7?
You will need to take 2 courses, one pre-filing and one post-filing. The deadline to take the second course is 45 days AFTER your meeting with the trustee.
How much are the fees for Chapter 7?
The Court fee is currently $335. Our attorney fees vary depending on case complexity. We only charge reasonable fees. We will quote your fee after the free consultation, if not earlier.
Will Chapter 7 ruin my credit?
No. While the bankruptcy may lower your score in the short term, you will have the opportunity to raise your credit score when the bankruptcy is completed. Many of our clients have obtained car loans, mortgages, and business lines of credit within three (3) years of filing for bankruptcy.
Will I ever be able to buy a house after filing for Chapter 7?
Yes, provided you meet lender criteria for income, credit score, etc. The minimum waiting period is generally 3 years after case is discharged, for FHA mortgages. If there were special circumstances which lead to the bankruptcy filing, the waiting period may be even less.
What will happen to my car in Chapter 7?
If your car is paid off, you can keep the car if the blue book value is not too high. We will let you know. If you owe money on the car, you have the option to surrender the car to the finance company and eliminate the debt on the car, or to keep the car and to continue making payments.
What will happen to my mortgage in Chapter 7?
Chapter 7 discharges the promissory note but not the mortgage lien. Your mortgage will survive your bankruptcy. If you don't pay your mortgage, your lender can foreclose on your home. Unless you reaffirm the debt, your lender cannot collect the debt from your future income or assets.
How can I make sure that all of my creditors are listed in the Chapter 7?
We pull your credit report and import all creditors from the report into the bankruptcy petition. After we give you your credit report, please tell us about any creditors that are not listed. Parking tickets, collection agencies, payday loans, medical bills, and utilities are often not listed in the report.
Do I have to include all of my creditors in the Chapter 7?
Yes, the law requires all creditors to which you owe money to be listed. If you have a car loan or a mortgage, you will almost always have the option to keep the account and continue making payments.
I have scheduled monthly auto drafts from my accounts for my car loan and mortgage. How will this be treated in Chapter 7?
All auto drafts will be suspended upon the filing of the Chapter 7. In most cases, documents can be signed to restart the auto drafts, but in the meantime please make your payment manually.
Is it possible to keep a credit card when filing Chapter 7?
Usually, no. It is almost always the case that all credit card accounts will be closed. You may be able to obtain new credit card accounts when the bankruptcy is over.
Can I get rid of tax debts in Chapter 7?
Sometimes, yes, but the rules are complicated. Ask us during your consultation.
Can I get rid of student loans in Chapter 7?
Generally, no, unless you have a substantial hardship, such as a severe disability.
Can I get rid of parking tickets and tollway violations in Chapter 7?
Unfortunately, no. Only in Chapter 13.
My license has been suspended. Will Chapter 7 help me get my license back?
Yes, if the reason for the suspension was parking tickets, municipal fines, or auto accident with lack of insurance. In the case of municipal violations or parking tickets, these debts are not dischargeable, so the license could be re-suspended after the case is over. If you have a significant amount of these types of debts, Chapter 13 may be the better option.
Will I be taxed when my debt is discharged?
No, discharge of debt in bankruptcy is not taxable.
If I hire you, will my creditors continue to call and harass me?
Once we file your bankruptcy petition, all collection activity must stop. Please allow at least one week for this to happen from the filing date, because some creditors receive notice via US mail.
Will I have to attend Court for my Chapter 7?
Almost always, no. You will have to attend a meeting with the bankruptcy trustee. We will give you the date, time, and location when you file. You will have at least 30 days' notice. These meetings last an average of 10 minutes. We will be with you the entire time.
What happens at my bankruptcy meeting?
You will be asked some questions, mostly about the things you own. We will prepare you so that you will know most of the questions in advance.
What will I need to bring for my Chapter 7 meeting with the trustee?
Social Security Card and Driver's License (or State ID). Also bring something to do, as the wait times can sometimes be long.
Can my Chapter 7 be denied?
Yes, but if you are honest with the Court about your income and assets, it would be very unusual. We can almost always inform you in advance of any risks of denial.
I am married. Do I have to include my spouse in my Chapter 7?
You can file on your own without your spouse. However, unless you are separated, the law requires your spouse's income and expenses to be listed in your Petition.
Will my spouse's credit be affected if I file Chapter 7 alone?
Generally, no. But, if you have any joint debts, those accounts may be closed, and the closing of the accounts may affect the non-filing spouse's credit. Always make sure that if your spouse is not filing, you remove her as authorized user on all of your accounts.
Will I receive something showing my debts have been discharged?
Yes. You will receive in the mail, at the successful conclusion of your case, a discharge order. Keep this order in your files.
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