Chapter 7 FAQ

Connecticut Chapter 7 Bankruptcy Attorney
Toll Free: 1-800-722-8801

Located in Wallingford and Stratford, Connecticut Chapter 7 bankruptcy attorney Joseph J. D'Agostino, Jr., can assist you in understanding Chapter 7 bankruptcy and with preparing and filing a Chapter 7 bankruptcy petition, if appropriate.

Our experience and high level of personal service will ensure you are comfortable and confident with our legal representation and advice. Please visit our Firm Overview page for additional information about our qualifications and premier personal service.

The following frequently asked questions are intended to help guide you in your decision to seek relief under the Bankruptcy Code and provide you with some insight into Chapter 7 bankruptcy. Please contact us for a free confidential consultation to further discuss your options or with any questions. We are here for you.

What Is Chapter 7 Bankruptcy And How Does It Work?

Chapter 7 is that part (or chapter) of the Bankruptcy Code that deals with liquidation. The Bankruptcy Code is that part of the federal laws that deal with bankruptcy. A person who files under Chapter 7 is called a debtor. In a Chapter 7 case, the debtor must turn his or her nonexempt property, if any exists, over to a trustee, who then converts the property to cash and pays the debtor's creditors. In return, the debtor receives a Chapter 7 discharge, if he or she pays the filing fee, is eligible for such a discharge, and obeys the orders and rules of the court.

What Is A Chapter 7 Bankruptcy Discharge?

It is a court order releasing a debtor from all of his or her dischargeable debts and ordering the creditors not to attempt to collect them from the debtor. A debt that is discharged is one that the debtor is released from and does not have to pay. Some debts, however, are not dischargeable under Chapter 7, and some persons are not eligible for a Chapter 7 discharge.

What Debts Are Not Dischargeable Under Chapter 7?

All debts of any kind or amount, including out-of-state debts, are dischargeable under Chapter 7 except the debts listed below. The following is a list of the most common debts that are not dischargeable under Chapter 7:

(1) Some tax debts and some debts that were incurred to pay federal tax debts.

(2) Debts for obtaining money, property, services, or credit by means of false pretenses, fraud, or a false financial statement if the creditor files a complaint in the case (included here are debts for luxury goods or services and debts for cash advances made within 90 days before the case is filed).

(3) Debts not listed on the debtor's Chapter 7 forms, unless the creditor knew of the case in time to file a claim.

(4) Debts for fraud, embezzlement, or larceny, if the creditor files a complaint in the case.

(5) Debts for alimony, maintenance, or support and, if the creditor files a complaint in the case, certain other divorce-related debts including property settlement debts.

(6) Debts for intentional or malicious injury to the person or property of another, if the creditor files a complaint in the lease.

(7) Debts for certain fines or penalties.

(8) Debts for educational benefits and student loans are not dischargeable unless a court finds that not discharging the debt would impose an undue hardship on the debtor and his or her dependents.

(9) Debts for personal injury or death caused by the debtor's operation of a motor vehicle while intoxicated.

(10) Debts that were or could have been listed in a previous bankruptcy case of the debtor in which the debtor did not receive a discharge.

What Persons Are Not Eligible For A Chapter 7 Discharge?

The following persons are not eligible for a Chapter 7 discharge:

(1) A person who has been granted a discharge in a Chapter 7 case filed within the last eight years.

(2) A person who has been granted a discharge in a chapter 13 case filed within the last six years, unless 70 percent or more of the unsecured claims were paid off in the Chapter 13 case.

(3) A person who files a waiver of discharge that is approved by the court in the Chapter 7 case.

(4) A person who conceals, transfers, or destroys his or her property with the intent to defraud his or her creditors or the trustee in the Chapter 7 case.

(5) A person who conceals, destroys, or falsifies records of his or her financial condition or business transactions.

(6) A person who makes false statements or claims in the Chapter 7 case, or who withholds recorded information from the trustee.

(7) A person who fails to satisfactorily explain any loss or deficiency of his or her assets.

(8) A person who refuses to answer questions or obey orders of the bankruptcy court, either in his or her bankruptcy case or in the bankruptcy case of a relative, business associate, or corporation with which he or she is associated.

Does A Person Lose All Of His Or Her Property By Filing Under Chapter 7?

Usually not. Certain property is exempt and cannot be taken by creditors, unless it is encumbered by a valid mortgage or lien. A debtor is usually allowed to retain his or her unencumbered (or unsecured) exempt property in a Chapter 7 case. A debtor may also be allowed to retain certain encumbered (or secured) exempt property (see Question 28, below). Depending on the law of the local state, property that is exempt in a Chapter 7 case may be either property that is exempt under state law or property that is exempt under the Bankruptcy Code.

What Persons Are Eligible To File Under Chapter 7?

Any person who resides in, does business in, or has property in the United States may file under Chapter 7, except a person who has been involved in another bankruptcy case that was dismissed within the last 180 days on certain grounds.

What Persons Should Not File Under Chapter 7?

A person who has substantial debts that are not dischargeable under Chapter 7 should not file under Chapter 7. In addition, it may not be wise for a person with current income sufficient to repay a substantial portion of his or her debts within a reasonable period to file under Chapter 7, because the court may dismiss the case as constituting an abuse of Chapter 7. Although it is not a legal requirement, some experts say that a Chapter 7 case should not be filed unless a person's dischargeable debts exceed the value of his or her nonexempt assets by at least two thousand dollars.

How Much Is The Chapter 7 Filing Fee And When Must It Be Paid?

The filing fee is $279 for either a single or a joint case.

Where Is A Chapter 7 Bankruptcy Filed?

In the office of the clerk of the bankruptcy court in the district where the debtor has resided or maintained a principal place of business for the greatest portion of the last 180 days. The bankruptcy court is a federal court and is a unit of the United States district court.

May A Husband And Wife File Jointly Under Chapter 7?

Yes. A husband and wife may file a joint petition under Chapter 7. if a joint petition is filed, only one set of bankruptcy forms is needed and only one filing fee is charged.

Under What Conditions Should Both Spouses File Under Chapter 7?

Both husband and wife should file if one or more substantial dischargeable debts are owed by both spouses. If both spouses are liable for a substantial debt and only one spouse files under Chapter 7, the creditor may later attempt to collect the debt from the non-filing spouse, even if he or she has no income or assets. In community property states it may not be necessary for both spouses to file if all substantial dischargeable debts are community debts. The community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington.

How Does The Filing Of A Chapter 7 Case Affect Collection And Other Legal Proceedings That Have Been Filed Against The Debtor In Other Courts?

The filing of a Chapter 7 case automatically stays (or stops) virtually all collection and other legal proceedings pending against the debtor. A few days after a Chapter 7 case is filed, the court mails a notice to all creditors ordering them to refrain from any further action against the debtor. Any creditor who intentionally violates the automatic stay may be held in contempt of court and may be liable to the debtor for damages. Criminal proceedings and actions to collect alimony, maintenance, or support from exempt property or property acquired by the debtor after the Chapter 7 case was filed are not affected by the automatic stay. The automatic stay also does not protect cosigners and guarantors of the debtor, and a creditor may continue to collect debts of the debtor from those persons after the debtor files a Chapter 7 case.

May A Person File Under Chapter 7 Bankruptcy If His Or Her Debts Are Being Administered By A Financial Counselor?

Yes. A financial counselor has no legal right to prevent anyone from filing under Chapter 7.

How Does Filing Under Chapter 7 Bankruptcy Affect A Person's Credit Rating?

It will usually worsen it, if that is possible. However, some financial institutions openly solicit business from persons who have recently filed under Chapter 7, apparently because it will be at least eight years before they can again file under Chapter 7. If there are compelling reasons for filing under Chapter 7 that are not within the debtor's control (such as an illness or an injury), some credit rating agencies may take that into account in rating the debtor's credit after filing.

Are The Names Of Persons Who File Under Chapter 7 Published?

When a Chapter 7 case is filed, it becomes a public record, available at the Bankruptcy Court only. However, newspapers do not report or publish the names of consumers who file under Chapter 7.

Are Employers Notified Of Chapter 7 Cases?

Employers are not usually notified when a Chapter 7 case is filed.

May Employers Or Governmental Agencies Discriminate Against Persons Who File Under Chapter 7?

No. It is illegal for either private or governmental employers to discriminate against a person as to employment because that person has filed under Chapter 7. It is also illegal for local, state, or federal governmental units to discriminate against a person as to the granting of licenses (including a driver's license), permits, student loans, and similar grants because that person has filed under Chapter 7.

When Must A Debtor Appear In Court In A Chapter 7 Case And What Happens There?

The first court appearance is for a hearing called the "meeting of creditor." This hearing usually takes place about a month after the case is filed. At this hearing the debtor is put under oath and questioned about his or her debts and assets by the hearing officer or trustee. In most Chapter 7 consumer cases no creditors appear in court; but any creditor that does appear is usually allowed to question the debtor.

What Happens After The Meeting Of Creditors?

After the meeting of creditors, the trustee may contact the debtor regarding the debtor's property, and the court may issue certain orders to the debtor. These orders are sent by mail and may require the debtor to provide the trustee with certain information. If the debtor fails to comply with these orders, the case may be dismissed and the debtor may be denied a discharge.

What Is A Trustee In A Chapter 7 Bankruptcy, And What Does He Or She Do?

The trustee is an officer of the court, appointed to examine the debtor, collect the debtor's nonexempt property, and pay the expenses of the estate and the claims of creditors. In addition, the trustee has certain administrative duties in a Chapter 7 case and is the officer in charge of seeing to it that the debtor performs the required duties in the case. A trustee is appointed in a Chapter 7 case, even if the debtor has no nonexempt property.

What If The Debtor Has No Nonexempt Property For The Trustee To Collect?

If, from the debtor's Chapter 7 forms, it appears that the debtor has no nonexempt property, a notice will be sent to the creditors advising them that there appears to be no assets from which to pay creditors, that it is unnecessary for them to file claims, and that if assets are later discovered they will then be given an opportunity to file claims. This type of case is referred to as a no-asset case. Approximately one-half of all Chapter 7 cases that are filed are no-asset cases.

How Are Secured Creditors Dealt With In A Chapter 7 Bankruptcy?

Secured creditors are creditors with valid mortgages or liens against property of the debtor, most commonly a mortgage or car loan. The claim of a secured creditor is called a secured claim and secured claims must be collected from or enforced against secured property. Secured claims are not paid by the trustee. A secured creditor must prove the validity of its mortgage or lien and obtain a court order before repossessing or foreclosing on secured property. The debtor should not turn any property over to a secured creditor until a court order has been obtained. The debtor may be permitted to retain or redeem certain types of secured personal property (see Question 28, below).

How Are Unsecured Creditors Dealt With In A Chapter 7 Bankruptcy?

An unsecured creditor is a creditor without a valid lien or mortgage against property of the debtor, most commonly a credit card or medical bill. If the debtor has nonexempt assets, unsecured creditors may file claims with the court within 90 days after the first date set for the meeting of creditors. The trustee will examine these claims and file objections to those deemed improper. When the trustee has collected all of the debtor's nonexempt property and converted it to cash, and when the court has ruled on the trustee's objections to improper claims, the trustee will distribute the funds in the form of dividends to the unsecured creditors according to the priorities set forth in the Bankruptcy Code. Administrative expenses, claims for wages, salaries, and contributions to employee benefit plans, claims for the refund of certain deposits, claims for alimony, maintenance support, and tax claims, are given priority, in that order, in the payment of dividends by the trustee. If there are funds remaining after the payment of these priority claims, they are distributed pro rata to the remaining unsecured creditors.

What Secured Property May A Debtor Retain Or Redeem In A Chapter 7 Bankruptcy?

A debtor may retain and redeem certain secured personal and household property, such as household furniture, appliances and goods, apparel, and tools of trade, without payment to the secured creditor, if the property is exempt and if the mortgage or lien against the property was not incurred for the purpose of financing the purchase of the property. A debtor may also retain and redeem without payment to the secured creditor any secured property that is both exempt and subject only to a judgment lien. Finally, a debtor may redeem certain exempt personal, family, or household property by paying to the secured creditor an amount equal to the value of the property, regardless of how much is owed to the creditor. Deadlines are imposed on the enforcement of these rights by the debtor during the bankruptcy case.

How Long Does A Chapter 7 Bankruptcy Case Last?

A Chapter 7 case begins with the filing of the case and ends with the dosing of the case by the court. If the debtor has no nonexempt assets for the trustee to collect, the case will most likely be dosed shortly after the debtor receives his or her discharge, which is usually about four months after the case is filed. If the debtor has nonexempt assets for the trustee to collect, the length of the case will depend on how long it takes the trustee to collect the assets and perform his or her other duties in the case. Most consumer cases with assets last about six months.

What Should A Person Do If A Creditor Later Attempts To Collect A Debt That Was Discharged Under Chapter 7?

When a Chapter 7 discharge is granted, the court enters an order prohibiting the debtor's creditors from later attempting to collect any discharged debt from the debtor. Any creditor who violates this court order may be held in contempt of court and may be liable to the debtor in damages. If a creditor later attempts to collect a discharged debt from the debtor, the debtor should give the creditor a copy of the order of discharge and inform the creditor in writing that the debt has been discharged under Chapter 7. If the creditor persists, the debtor should contact an attorney. If a creditor files a lawsuit against the debtor on a discharged debt, it is important not to ignore the matter, because even though a judgment entered against the debtor on a discharged debt can later be voided, voiding the judgment may require the services of an attorney, which could be costly to the debtor.

How Does A Chapter 7 Discharge Affect The Liability Of Cosigners And Other Parties Who May Be Liable To A Creditor On A Discharged Debt?

A Chapter 7 discharge releases only the debtor. The liability of any other party on a debt is not affected by a Chapter 7 discharge. Therefore, a person who has cosigned or guaranteed a debt for the debtor is still liable for the debt regardless of the debtor's Chapter 7 discharge.

Contact a Connecticut Chapter 7 Bankruptcy Attorney

For additional information about Chapter 7 bankruptcy laws, the bankruptcy process, or to discuss your financial situation in confidence with an experienced consumer bankruptcy attorney, we invite you to call us toll free at 1-800-722-8801, e-mail us, or fill out our intake form on our Contact Us page.