Chapter 7 Bankruptcy: The Wonders Of Number 7 (pt 1)

Chapter 7 Bankruptcy: The Wonders Of Number 7 (pt 2)

This 2 part video series gives an entertaining overview of the Chapter 7 bankruptcy process including filing with the Bankruptcy Court, credit counseling, the 341a meeting of the creditors and the automatic stay. This video tells you exactly what you need to know about how to get rid of toxic debt. Starring James P. Doan, Esq. and Emily Chase Smith, Esq.

Not only is bankruptcy an intimidating word, the thought of voluntarily submitting yourself to this process sounds about as exciting as swimming with sharks – wait there are a lot of similarities there. But we're here to tell you that the sharks are vegetarians. Or they have a really bad dentist and have lost all their teeth. They're really just dolphins on a power trip, but I digress. The benefits of bankruptcy are many, but what do you need to do to get those? Are we looking at a walk down the block, a 5k or is it like climbing Mount Everest? What lies between you and a successful discharge of your debts? We'll start with chapter 7, because that's what most bankruptcies are. There is chapter 13s as well – their process is similar and we go into it more in our video blog titled "Is 13 Your Lucky Number?"

In general terms, Chapter 7 is a total liquidation and is a 4-6 month process. Chapter 13 is a restructuring and repayment of some or all of your debt and is a 3-5 year process. A bit of trivia - chapters 7 & 13 are named after sections, called chapters, of the United States Bankruptcy Code. First hurdle is the lawyer – that's enough to make many quit right now. That alone can feel a bit "Mount Everest", but of course your choice of lawyer is important. You want someone that's been doing bankruptcy longer than that kids' been alive. Pick your bankruptcy attorney with the same care you choose your dentist, child care, even your mechanic. Go with someone with experience, who can craft a plan from beginning to end based on your specific debts, assets and goals. That's going to be a bit tough to do because we've snapped them all up for the Doan Law Firm, but at least you know where to find them in captivity.

You've got your hired gun, your man, or woman, in your cornet, what next? Before you can start the bankruptcy case, you need to take a credit counseling course. Don't think traffic school, it's short, painless and actually informative. You can even take it online, at midnight, in your bathrobe, with a sandwich. Once your fees are paid in full (attorneys insist on this so they don't have to list their fees as a debt and have them discharged in the bankruptcy - only rookies make that mistake), your attorneys and their staff work their magic, run through the rabbit trail of paperwork and forms, check the boxes and fill in the blanks. For this portion of the process, at the Doan Law firm, we assign you a case manager. We have a team of people who love detail, paperwork and are like hogs in mud preparing the reams of paperwork, making their lists and checking them twice. Think bankruptcy bankers. Once every "I" is dotted and "t" is crossed, you go over the petition and sign under penalty of perjury that everything is true and correct and the case is filed with the court.

Once the case is filed, the most wonderful, most amazing, most marvelous thing occurs. Its name does not begin to probe the depths of its wonderfulness – the automatic stay. The automatic stay, the "stay o'matic" as it could have been called in the 50s or "creditors be gone" if it was contained in the gardening section, means that all collection efforts must stop. Process servers no longer lurk in the bushes outside your house, your phone becomes eerily quiet and your full paycheck returns – garnishments are banished. The sun peeks through the clouds, the flowers bloom, the smell of apple pie cooling on the windowsill wafts by and all is right with the world. The bankruptcy still has a few steps until it's full grown and hatched, but the hard part, the decision making, is done.

Once you've filed your petition with the bankruptcy court and the automatic stay is in place, you get ready for the 341a meeting of creditors held about one month after filing the petition. Again, we would advocate a much more creative and inspiring name for the 341a meeting, but no one asked us. Can't you just imagine it, angry men with sweaty foreheads in bad suits yelling like they're on the floor of the New York Stock Exchange? Luckily for us all, it's not like that. It really more resembles the department of motor vehicles – several dozen people all scheduled for the same appointment time, waiting in bad chairs complaining about the weather while overworked officials stamp and process enough tree pulp to plant a forest in Death Valley.

The 341a meeting is held in front of a trustee, not a judge, and the trustee's primary interest is verifying that what is contained in the petition is true and locating assets that are not exempt to sell to satisfy the creditors. There are a great many assets that you can keep in bankruptcy. If you want more information about exempt assets, see our video entitled Mine, Mine, Mine! The 341a meeting takes about 3-5 minutes. Creditors can appear and ask questions, but generally none show up except for a few die-hards. Sears likes to camp out at the courthouse steps and wants to know if you still have that big screen TV. that was charged on the Sears card. Maybe that's because they have all that free camping gear and Coleman lanterns. After the 341a meeting, it's all over but the shouting.

You have another course to take, this one on financial management, again online, at midnight, in your bathrobe, with milk and cookies. In most cases, in about 90 to 120 days, you receive a final discharge. Again, we'd look for a more cheery name, but that's just us. The final discharge is the golden ticket and you don't have to buy and unwrap 1,000 Willy Wonka Bars to get it. The discharge means that all your debts are gone (with a few exceptions your attorney will discuss with you like student loans, taxes, child support, etc.), washed away, as far as the East is from the West. No one can try to collect them and if they do, they're in big trouble mister. The discharge is the fresh start. It's the base from which to rebuild and remember, with a chapter 7, you can't file again for 8 years so be extra careful because those credit card offers will be hanging out of the front of your mailbox – from the very same credit cards you just discharged in bankruptcy.

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