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Chapter 7 Bankruptcy
Debt Relief for Colorado Individuals & Businesses
The Congress of the United States of America has legislated that Dart Law is a Debt Relief Agency pursuant to Federal Law. Dart Law helps clients access debt relief under the Federal Bankruptcy Code.
The legal team at the Dart Law has extensive experience representing clients in bankruptcy. Below we have provided a discussion about Chapter 7 bankruptcy to help you understand the basics of filing for bankruptcy relief under Federal Law.
Chapter 7 Bankruptcy
Chapter 7 is known as liquidation bankruptcy, where the trustee liquidates nonexempt assets in order to pay off your debt. By the end of Chapter 7, nearly all debt is discharged within several months of filing the chapter. Most debtors attempt to file a Chapter 7 to avoid the monthly payments to the trustee.
What to expect when filing Chapter 7
Filing the petition: Upon the filing of the petition, an automatic stay goes into effect, which makes it illegal for anyone to attempt to collect any money from the debtor. Any pending suits, such as foreclosures, are stopped, and all collection calls from creditors stop. In fact, anyone who violates the stay could be held in contempt of the bankruptcy court.
Creditor meeting: Approximately 30 days after the debtor files the petition, the first meeting of creditors is held by the bankruptcy trustee. The trustee is a lawyer that the court appoints to do all the "legwork" for the court in the case. At this meeting the trustee asks the debtor a series of questions under oath about his or her finances and the petition. Creditors may ask questions as well, if they choose to appear.
Discharge: Once the first meeting is over, the debtor typically waits for the court to process the file. If all goes well, 90 days after the first meeting, the court will enter the discharge order. The discharge is the key order in the case, and it provides that the dischargeable debts are forgiven and the debtor is not responsible to pay them. In most cases unsecured debts (debts without collateral), such as credit card bills, medical bills, and deficiencies on foreclosed homes or repossessed cars, are discharged. This is the "fresh start" bankruptcy is designed to provide. Typically, the bankruptcy case is closed shortly after the discharge is entered.
Secured debt: For each secured debt (where the debtor has pledged collateral, such as a home mortgage or car loan), the debtor must decide to reaffirm the debt or surrender the collateral. To reaffirm, the debtor enters into a contract with the creditor which says that the debtor will pay the debt in exchange for keeping the collateral. Alternatively, the debtor may elect to surrender the collateral in exchange for having the debt discharged.
Exemptions Under Chapter 7: There is a common misconception that bankrupt debtors lose all their assets. This is not true, because the Bankruptcy Code provides exemptions which state that the debtor may keep certain types and amounts of assets. For example, the debtor will keep all retirement accounts, and most household property. Vehicle and Homestead exemptions are generous under Colorado exemption laws. The goal in any bankruptcy is to exempt all assets, but in some cases assets over the exemptions can be claimed by the court to be sold to pay some of the creditors. In the hands of a competent bankruptcy attorney, Chapter 7 can be an effective tool to give the debtor a fresh start while keeping his home vehicle and other assets.
Is a Chapter 7 Bankruptcy Right for You?
We know that you probably have a lot of questions about whether you qualify for a certain chapter and which chapter is right for you. You can explore your options with the Colorado bankruptcy lawyer at the Dart Law to learn more.
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Friday – 9:00 am to Noon
Weekends & Federal Holidays – By appointment
Dart Law PC
Est. 2010
Contact Info
Denver Headquarters
Dominion Towers
600 17th Street
Suite 2869 South
Denver, Colorado 80202
Fort Collins Old Town
Fort Collins, Colorado 80524
(303) 228-7070
(970) 648-0048
info@dart-law.com