Chapter 7 Continued
Chapter Seven can be tricky! The Court always appoints a Trustee in each case. The Trustee is NOT on your side - he's trying to find a way to pay these unsecured creditors from your non-exempt assets. Also, the Trustee looks for situations in which any creditor or relative has received a substantial payment or transfer of property from you before filing the bankruptcy. The Trustee can sue the creditor or your relative to recover the transferred money or property for the benefit of all your creditors.
Also, creditors have a right to object to your bankruptcy. If a creditor feels that its loan or credit card has been fraudulently obtained or used, a "mini" lawsuit in your bankruptcy case can be filed by the creditor. The creditor can ask the Court to declare that its claim should survive the bankruptcy and not be discharged. A creditor or the Trustee can also claim that you were not truthful when filling out the bankruptcy paperwork. Consequently, truthful disclosure in your bankruptcy case is essential and professional assistance is extremely helpful.
As discussed above, you are entitled to keep certain property exempt from the Trustee or creditors in bankruptcy. Exemptions include the house that you are buying and live in; certain personal property; pension and 401k plans; and a portion of a vehicle titled in your name. There are other exemptions such as workmen’s comp. claims, social security, and disability payments.
When your bankruptcy case is successfully concluded, the Court will issue you a Discharge which eliminates the debts (certain exceptions apply) and serves as a permanent injunction to creditors which tells creditors “Do not attempt to collect this debt.” Of course, if you wish to keep your house or car, you must continue making the mortgage or lien payments when due. (Sorry- no free houses or cars!). The Discharge also has important credit rebuilding potential when submitted to the credit bureau – because you have eliminated your previous debt, you now have a fresh start.
