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Chapter 7

Chapter 7 Bankruptcy is designed for

individuals in need of a fresh start.

This chapter is often referred to as a liquidation case because, in theory, a person agrees to surrender all of their assets in exchange for being relieved of his or her debts. 

In reality, however, the mass majority of individuals filing chapter 7 never give up any of their assets.  The law permits a person to keep a certain amount of assets and, often times, these exemptions are enough to protect all of the individual's assets from creditors.  In most instances, individuals can keep their home and vehicles.  Also, generally retirement accounts (401K, IRA, pensions) are not affected by a Chapter 7 bankruptcy and the debtors are allowed to keep their entire retirement accounts.

Of course, this is general information and each case is unique.  A thorough evaluation of your particular situation is necessary to determine if this Chapter is available to you.

The process of a chapter 7 filing goes like this:

  • First, when your case is filed the automatic stay goes into effect which prohibits your creditors from taking action to collect on your debts.  The bankruptcy court sends a letter to each listed creditor notifying them of the bankruptcy filing. 
  • Next, about 30 days after filing the case, a creditor's meeting will be held which you must attend. This meeting, which usually takes place in person is currently being held on Zoom.  The meeting gives the trustee and any interested creditors an opportunity to question you under oath about your case.  It isn't exactly a meeting among friends, but it isn't an inquisition either.  More often than not, no creditors appear and the trustee asks routine questions that have already been asked by your attorney when the case was being prepared.  If you have been honest and forthright with your attorney, there shouldn't be any unpleasant surprises at the creditor's meeting.
  • Following the creditor's meeting, there is a 60-day period in which any creditors can file an objection to a bankruptcy discharge.  Generally, nothing happens and the debtor will receive a discharge at the end of that period. If no objections have been filed and the debtor has completed the post filing financial education course, the debtor will receive a discharge and the case will be finished.  Thus, if everything goes smoothly, it is about a three month process from the time the case is filed until the discharge order is entered. 

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The Law Offices of Jeffrey S. Harris is committed to answering your questions about Family Law, Bankruptcy, Real Estate and Immigration Law issues in Chicago and throughout Cook County, Lake County, Will County and DuPage County.

We'll gladly discuss your case with you at your convenience. Contact us today to schedule an appointment.