Central Mortgage Blog

One of the major benefits of protection under Chapter 7 is that many creditor action are stayed. This means that debt collection efforts and foreclosure is halted. Once a creditor or bill collector becomes aware that you have filed for bankruptcy protection, he or she must stop all efforts to collect the debt. After your bankruptcy is filed, the court mails a notice to all creditors listed in your schedules.

This usually takes a couple of weeks. If this is not soon enough, then you should have your representative inform the creditor immediately. If a creditor continues to use collection tactics once informed of the bankruptcy then you may be liable for court sanctions and attorney fees for this conduct.
These laws and regulations under Chapter 7 are clear and straightforward. During this process you may have the only luxury of saying “you’ll have to talk to my lawyer”.

I know that this subject is not a pleasant thing to talk about, but did you ever hear the expression (knowledge is power)? The underlying policy of bankruptcy law is that the honest debtor who is in debt beyond his or her ability to repay the debt should be given a fresh start through the discharge of debts in a bankruptcy proceeding. However, not all debts are dischargeable. Generally speaking, the following debts will not be discharged:
1. Taxes
2. Spousal and child support
3. Debts arising out of willful or malicious misconduct
4. Liability while driving intoxicating
5. Debts from prior bankruptcy
6. Student loans
7. Criminal fines and penalties Those debts that are secured will be discharged, however, expect the creditor to take back the property.
In most cases if the debtors equity interest in the property is exempt, the debtor may retain the property by redemption or reaffirmation. This article deals with Chapter 7 consumer bankruptcy. Please understand that each state has its own bankruptcy laws, therefore, check with your state for details.

Chapter 7 bankruptcy is a liquidation proceeding. Where the debtor turns over all none-exempt property to the bankruptcy trustee, then who converts it to cash for distribution to the creditors. The debtor receives a discharge of all dischargeable debts.
The following are qualifications for filing a Chapter 7 bankruptcy:
1. You must reside or have a domicile a place of business or property in the United States or a Municipality.
2. You must have not been granted a Chapter 7 discharge within the last 6 years or completed a Chapter 13 plan.
3. You must not have a bankruptcy filing dismissed for cause within the last 180 days.
4. It must not be a “substantial abuse” of Chapter 7 to grant the debtor relief. Generally speaking, after paying the monthly expenses for necessities where there is not enough money to pay the remaining monthly debts, then granting a discharge would not be an abuse of Chapter 7.
5. It would not be fundamentally unfair to grant the debtor relief under Chapter 7. Of course, each state has it’s own bankruptcy laws, so you need to check with your state for details.