What Exactly Is A Chapter 7 Bankruptcy?
A Chapter 7 bankruptcy is essentially a liquidation bankruptcy, and is usually filed by a debtor who has determined that they are overwhelmed by their debts and in need of help. A Chapter 7 bankruptcy will wipe out credit card debt, medical bills, and any unsecured loans. If someone has a car loan, they may be able to negotiate it to a lower rate if they can pay the amount upfront and out-of-pocket. Alternatively, a lending company might be willing to lend them enough money to pay for the value of the car. When a debtor comes into my office and expresses interest in a Chapter 7 bankruptcy, we will discuss their situation and begin creating a bankruptcy petition.
Once the bankruptcy petition is in place, we will review all of the paperwork to ensure accuracy before filing the case. Once filed, the court will set a hearing date to occur 30 to 45 days after the filing date. The hearing will occur in front of a Chapter 7 trustee who is assigned by the United States trustee for that district, which could be the district of New Jersey, the Southern District of New York, the Eastern District of New York, or any US vicinage in which the trustee has charge. At that hearing, the trustee will ask several questions of the debtor about their testimony and to verify that the paperwork in the petition is true and free from fraud.
Assuming the trustee is satisfied with the testimony, the trustee will likely issue a report of no distribution after the hearing. Once the report of no distribution is entered, the trustee will not claim any interest in any of the property that the debtor may owe. The discharge will not be entered until 60 days from the date of the hearing, and within that 60-day period, a creditor could file an objection to the discharge. However, objections occur quite infrequently; there usually has to have been a frivolous or fraudulent event whereby the debtor took advantage of the creditor. If the creditor were to file some sort of action, it would only apply to that specific creditor unless that creditor was seeking an overall no discharge based on fraud. Discharges typically occur about 60 days after the 341 hearing, which is the meeting of creditors.
The discharge document serves as an order of discharge that is issued by the court and signed by a judge. It states that all of the debts that were subject to discharge requirements were included in the bankruptcy and will therefore be discharged. However, that does not include mortgages and car loans, which are discharged to the individual personally but not discharged in terms of their effect on the individual’s property. This means that if someone wants to keep their house, they will have to continue to pay their mortgage, and if they want to keep their car, they will have to continue to pay for the car. Many people get confused and think that they can obtain a free house or car, which is not the case.
What Is A Chapter 7 Discharge?
A Chapter 7 discharge is an order that is entered by a federal district bankruptcy judge and states that the debts that were included in the bankruptcy are eliminated. These debts can include credit card debts, medical bills, unsecured personal loans, and debts from family or friends. If someone does not want their car, then they can include that as well.
For more information on Chapter 7 Bankruptcy In New Jersey, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (877) 606-1222 today.
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