Are you drowning in debt and being badgered daily by creditors and collections agencies? Perhaps friends, family, and maybe even Colorado Springs Chapter 7 bankruptcy lawyers have advised that a chapter 7 bankruptcy may be a good option to explore. But as Michael Scott embarrassingly learned in the popular NBC sitcom “The Office,” discharging your debts through bankruptcy involves much more than loudly declaring “Bankruptcy!” in front of witnesses.
The first step in the bankruptcy process involves filing a petition with the court, which starts a process that, if successful, should result in the clearing of your debts.
Here is what you can expect after you have filed the bankruptcy petition, according to Colorado Springs Chapter 7 bankruptcy lawyers.
The Automatic Stay
Immediately after filing a Chapter 7 Bankruptcy petition, an automatic stay goes into effect, which is a court order that requires all creditors to immediately cease any collections activity. This means that creditors must cease collections calls, demand letters and other written and electronic correspondence related to collections, lawsuits, garnishments of assets or wages, and foreclosure proceedings. If your creditors continue to engage in any of these activities, they are in violation of the court order.
Assignment of a Chapter 7 Trustee
Once you have filed your bankruptcy petition, the court will assign a bankruptcy trustee to your case. This trustee is responsible for administering your bankruptcy estate, which includes all nonexempt property and assets. The trustee will review your bankruptcy petition against other supporting documentation for accuracy, and will identify any nonexempt property that will be sold to pay your creditors.
Convening of the 341 Meeting of Creditors
Your trustee will also convene and preside over what is known as a 341 Meeting of Creditors, where representatives from all of your creditors will be present. You will also be required to attend, and if you fail to do so, your petition will likely be dismissed. During this meeting, your trustee will ask you questions about your petition and your financial affairs, which you are legally required to answer truthfully since you will be under oath. Your creditors will also be permitted to ask you questions during this meeting.
After the creditors meeting, your trustee will decide whether you have any nonexempt property that can be sold for the benefit of your creditors. If any property is identified and located, it will likely be sold directly or auctioned, with the proceeds directed to your creditors.
If you have no nonexempt property, the trustee will report to the court that there are no assets in your case.
Financial Management Course
You will be required to complete a financial management course within 60 days of the first set date of the meeting of creditors. Even if you are granted a re-scheduling of the meeting, you will still need to complete the course within sixty days of the originally scheduled date.
Discharge of Debts
If there are no objections in the case and you complete all court-ordered instructions, you should receive a discharge of debts 3-4 months after filing your petition. The discharge will eliminate all of your debts except for a few exceptions, such as court ordered child support payments, taxes, and student loans. This new blank credit slate will allow you to begin to rebuild your credit.
Successful Bankruptcy Petitions
Although it may sound easy, it is actually quite difficult to file a successful Chapter 7 bankruptcy petition. You only have one chance to make sure that your essential property and assets are treated as exempt, and therefore protected from sale for the benefit of your creditors. Failure to do so may result in your property being confiscated and sold. Qualified Colorado Springs Chapter 7 bankruptcy lawyers will ensure that any property you want to keep is considered exempt under the petition, as well as provide advice during court hearings, meetings and the property assessment portion of the bankruptcy process.