Chapter 7 Frequently Asked Questions
What is a Chapter 7 Bankruptcy?
What Does a Chapter 7 Discharge Do?
How do I obtain a Chapter 7 Discharge?
What is the bankruptcy means test?
It is advisable that you hire a Denver Colorado bankruptcy attorney for this process. The means test is not a straightforward form to complete. Most pro se debtors learn this only after their case is filed and dismissed. The form has many limitations which are not immediately discernible from the form itself. Since the form was first implemented, the expenses which may be deducted on the form have been limited by judicial decisions. Only by staying up to date with current case law is an attorney able to properly complete the form. Do not rely on online means test forms. These online forms allow a debtor to deduct all of their actual expenses. You cannot substitute the advice of counsel to complete the chapter 7 means test form.
Your attorney will immediately advise you whether you are eligible under the form 22(a) Means Test and provide counsel on how to proceed. It is not advisable for a debtor to proceed with a chapter 7 bankruptcy once their attorney has determined a presumption of abuse will arise in the case. There are certain exceptions to this for debtors who income from the last 6 months does not reflect their current situation. The form is based on the last 6 months of income and therefore the U.S. Trustee’s office may allow the case to proceed so long as the debtor provides substantial documentation to support their current situation.
If a presumption of abuse arises, your attorney should advise you of this before the case is filed. It is generally not advisable to proceed with a chapter 7 unless certain exceptions which your bankruptcy attorney can explain are applicable to your case. If you decide to proceed with such a case, the U.S. Trustee’s office will file a presumption of abuse. You will not receive a discharge unless you successfully convince the trustee that you merit an exception with is very rarely granted.
Are there other factors that would prevent a discharge?
- You filed a chapter 7 in the last 8 years and received a discharge or you filed a chapter 13 in the last 6 years (with certain exceptions).
- You defraud your creditors in your chapter 7 case by concealing or transferring valuable non-exempt assets.
- You made false claims regarding your financial condition in order to obtain credit and the creditor objects.
- You falsify or conceal financial records and/or business agreements.
- You mislead the chapter trustee appointed to your bankruptcy case regarding your financial situation and/or withhold information form the trustee.
- You fail to explain a significant loss of property. For example if you liquidate significant non-exempt assets before you file bankruptcy and fail to explain what you did with the proceeds.
- You fail to attend the meeting of creditor or fail to answer questions during the meeting.
- You fail to take a course in personal financial management within 45 days of the meeting of creditors.
- You were convicted of bankruptcy fraud in the past.
- This is not a comprehensive list. Other exemptions to eligibility may apply. Seek legal counsel with any questions.
Which debts are not discharged?
- Debts owing to a governmental unit are not dischargeable this includes parking tickets and speeding tickets.
- Most of your recent tax debts are not discharged. Some tax debts are eligible for discharge. To be eligible, at the very least the tax return from which the tax debt is owing must have been due at least 3 years ago. For example, if you have a tax debt from 2009 the earliest you may discharge that debt is April 15, 2013. In some cases you may have to wait longer than three years from the date the tax return was due. You should seek legal advice from an experienced Denver Colorado bankruptcy attorney if you have significant tax debts.
- Debts which were obtained by false pretenses or fraud and the creditor objects to the discharge.
- Debts which you omit from your bankruptcy schedules, unless the creditor knew of the bankruptcy case in time to file a claim.
- Most of your divorce-related debts, including property settlement debts, alimony, and child support are not dischargeable.
- Debts which resulted from intentional or malicious injury to another person or property and the creditor files a complaint with the bankruptcy court.
- Education loans are very difficult to discharge and most debtors will not qualify for the rare exception given to those individuals who can prove undue hardship.
- If you injured someone or their property while driving under the influence any of your resulting debts from the accident are not dischargeable.
- This is not a comprehensive list. Other exceptions may apply.
Where should I file if I recently moved.
Can I File Bankruptcy Without my Spouse?
There are also good reasons to file bankruptcy with your spouse assuming you are both struggling with debt. The reasons include: saving money on legal and filing fees, attending one meeting of creditors, dealing with the same attorney and filing just one petition. There may also be reasons why a husband and wife may want to file separately. Seek counsel.
Are there reasons to delay filing?
If you have ongoing medical expenses from an injury or illness, you should wait until all anticipated costs have been billed.
If you anticipate receiving an inheritance in the near future, you should seek legal counsel on how to proceed.
If you are waiting on a tax refund or you have a significant amount of money coming your way, you will need to turn-over that money to the trustee unless you spent it before you filed. Always seek the advice of counsel when it comes to disposing of assets or spending large quantities of money before filing bankruptcy. This type of conduct could have implications on your Denver bankruptcy case.
When is it advisable to file bankruptcy right away?
If a creditor has a judgment against you the next step is a wage garnishment and/or bank account garnishment. Many individuals wait until the garnishment goes into effect to seek bankruptcy protection. By then it may be too late because the garnishment takes income that could have funded the bankruptcy legal costs.
Do Judgments go away when I File Bankruptcy?
How will filing bankruptcy affect my credit?
Will my friends, family or employer find out?
It is rare for a trustee to contact your employer unless there is a reason to do so.
Will potential employers discriminate against me for filing bankruptcy?
Can I expect to lose property in a chapter 7?
Which property can I keep?
Is there a court meeting?