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Get a fresh start and get out from underneath a proverbial mountain of
debt. Chapter 7 of the United States Bankruptcy Code allows individuals to
discharge their unsecured debts forever while still retaining some of their
property (e.g., some equity in their home, some equity in their car, their
furniture and clothing, etc.). Secured debts (e.g., a car loan) can often
be renegotiated ("reaffirmed") to reflect the current value of the
security.
Bankruptcy is designed to give those who will not likely get out of debt for
a significant amount of time (if ever) to discharge their debts so that they can
build a new financial future. Debtors faced with financial circumstances
beyond their control (e.g., a sudden and expensive illness, a death in the
family, or a divorce) often find it almost impossible to pay off their debts
over time from their own wages. Bankruptcy recognizes that debtors in such
circumstances will often abandon paying bills they would otherwise pay because
they feel that paying off all their debts is hopeless. Likewise, creditors
waste valuable resources attempting to collect on a debt that probably will
never be paid. Bankruptcy frees the debtor and the creditor from the
vicious burdens of insurmountable debt.
The bankruptcy "process" involves providing your attorney with
detailed information about your income, expenses, and debts so that an
evaluation can be made to determine whether you are legally
"insolvent" (i.e., bankrupt). In essence, the attorney will seek
to determine if your overall debts exceed your overall assets, and also whether
your monthly expenses exceed your monthly income. An evaluation will be
made to determine how much of your property is "exempt" (and that you
get to keep) and how much, if any, is "non-exempt" (and must be given
to a bankruptcy "trustee" and your creditors). If you qualify for
bankruptcy, your attorney will fill out the bankruptcy petition, schedules, and
statements (i.e., legal paperwork) and file them on your behalf. Your
creditors will be notified by the Bankruptcy Court that you intend to discharge
your debts. You will have to attend (and your attorney can attend) a
"meeting of creditors." The meeting is an opportunity for the
trustee and creditors to ask you questions (but few creditors ever show
up). It usually lasts only a few minutes. Assuming your paperwork
was in order (i.e., you did not forget to list some income or assets), a notice
of discharge of your debts will usually be sent by the Bankruptcy Court to you
and your creditors within a month or two following the meeting of creditors.
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