A chapter 7 is a liquidation chapter. This means that a chapter 7 Trustee can sell or liquidate property to pay off your creditors. A chapter 7 Trustee can only sell property that is non-exempt. Most Debtors will find that all of their property is exempt. Each state has its own exemption laws and some states opt into the federal exemptions. You should contact an attorney to discuss the exemptions that will apply in your case. Generally, the debtor’s house, car, household furniture, electronics and pets will all be exempt.
If there are no assets then a chapter 7 Trustee will issue a report to the court stating that they did not liquidate any property. Then the case will proceed to discharge and be closed. If a Trustee does determine that there are assets to sell he will file a notice with the court and the creditors and proceed to sell the assets. The Debtor will receive a discharge but the case will not close until the assets have been sold and creditors have been paid in whole or in part.
In order to initiate a chapter 7 case a debtor files a petition with the bankruptcy court for the area the debtor lives. In addition to the petition, the debtor must also file schedules of assets and liabilities; a schedule of current income and expenses and a statement of financial affairs
After the case is filed the debtor must also provide a copy of the tax return for the most recent tax year to the chapter 7 Trustee assigned to the case. These must be sent 7 days prior to the 341 meeting or the case may be dismissed. Debtors whose debts are primarily consumer debt have additional requirements. They must file: a certificate of credit counseling and all pay stubs if any received in the 60 days before filing.
If you have any questions about Chapter 7 or Chapter 13 Bankruptcy, contact the Dallas bankruptcy attorneys at Fears Nachawati today. Call 1.866.705.7584 or send an email to fears@fnlawfirm.com for a free consultation.