Chapter 7 is the process of getting relief from the creditors. There are some legal steps for filing chapter 7. After filing chapter 7, there are common financial and legal issues that may happen in your life. In addition, you have to understand what is happening in the creditors meeting, in the event of protection of your property, in your credit life, debts reduction and so on.
When you have got a discharge letter after filing chapter 7, your debts will be wiped out. The trustee also sells your nonexempt property to make payments to your creditor. The trustee will liquidate your nonexempt property and pay them. But exempt property will be as your own because there are state rules in the United States of America to save your exempt property. Chapter 7 is also called liquidation bankruptcy. So you are going to know some important information on what happens after filing chapter 7.
- 1 Chapter 7 Bankruptcy
- 2 Chapter 7 Discharge
- 3 Issues at the Meeting of Creditors
- 4 Issues After Meeting With Creditors
- 5 Role of a Trustee
- 6 What Happens to Property Turned Over to the Trustee?
- 7 What Happens to Your Secured Debts?
- 8 What Happens in Your Personal Life After Bankruptcy
- 9 What Happens in Your Credit Life?
- 10 What Happens to Mortgage After Filing For Bankruptcy Chapter 7?
Chapter 7 Bankruptcy
Chapter 7 is a process of relief from creditors. The debtors may have a business like a corporation, partnership, proprietorship and they may stand on the business instead of liquidation of the nonexempt property. On the other hand, under chapter 11, the debtors may opt for an adjustment of debts either by limiting the debt or by extending the time of repayment. They also seek a comprehensive reorganization.
After, filing for chapter 7 may not be easy at all because it is the legal process. Though many bankruptcies lawyers may help you proceed with the case by charge, one can easily get many ways on how to find a low income bankruptcies lawyers.
Chapter 7 Discharge
A discharge makes the debtors free from any personal liability for debts and legally ceases the creditors owed those debts from collecting forcefully. The chapter 7 discharge has some conditions like the debtors has to take part in the creditor meeting, get financial management training and counseling’s to make sure they are not able to pay the creditors according to very bad financial condition.
Issues at the Meeting of Creditors
When you have already filed for bankruptcy chapter 7, it is mandatory to attend the meeting of the creditor. It is also known as the 341 hearing process. At the meeting, there are bankruptcy trustees, creditors, and your physical presence. The creditors are present here to ask you some questions about your debts and your present financial condition.
However, the creditors are allowed to ask you some critical questions because it is totally about money. But you don’t feel worried and you have to answer the critical question in a simple way. You just make them understand that you have nothing to hide and you are honestly explaining your present financial condition.
The bankruptcy trustee will also examine your related papers or documents to make sure you are not capable enough to pay your creditors. After answering your question and checking your all financial papers the bankruptcy trustee may be satisfied according to your true and authentic answers.
After that, the meeting is going to be closed. In case your creditor has more queries about your inability to pay them, the trustee continues more hearing at the meeting. The trustee may also want more information and papers from and you have to provide and submit those information.
Issues After Meeting With Creditors
A meeting can be concluded when the creditors are agreed not to proceed for the hearing. It is a decision of the creditors who may continue or close the meeting after one hearing. Additionally, the bankruptcy trustee is also pleased to end this process as you have provided all related information and documents. But it does not mean that you are going to be discharged from the bankruptcy case.
However, there is no issue to be happy that you are being discharged from chapter 7. Creditors still may chase you in 60 days from the first date of the meeting and have more objections. But the objection may come and you need to answer their question.
In case there is no objection at the deadline of chapter 7, you have successfully completed all requirements of the bankruptcy discharge. A discharge letter from the court will be sent via mail. Before your discharge, you need to take a financial management course which explains rebuilds your financial recovery.
Role of a Trustee
Trustee is a mediation between debtors and creditors. This trustee is appointed by the court and he/she works for both interest of the debtors and creditors. The trustee will always let you know for the information and papers to submit at the creditor meeting.
At the 341 hearing, the trustee may give more time to be prepared at the meeting with related information and documents. You have to send that information and documents to the trustee to make sure the trustee can review your all documents. In case there is no question, you may be released from chapter 7.
What Happens to Property Turned Over to the Trustee?
In the event of liquidating your property, the trustee may require your property to be turned over so that money from selling your property can be paid to the urgent creditors. After making payment to the creditors, there may be remaining amount that is paid to the unsecured creditors.
However, when you are filing for chapter 7, there may be no issue of asset because the asset is deemed as a state exemption allowance. However, in the case of no asset issue, the trustee will notify the creditors explaining that there is no asset to pay you.
What Happens to Your Secured Debts?
Though you have filed for chapter 7 and got discharged from the court, the creditor will run after you ceaselessly. In case you are dropped from making the payment like a loan on your house, automobiles, car with pre-approved loans, the creditor may ask to eliminate your automatic state so that it is possible to repossess and foreclose on the property. It is important to be current to make payments to make sure you are not losing any assets like home automobiles. The creditor may seek a lien against your property as you didn’t make a payment on your property. However, you are able to wipe out the lien in Chapter 7 bankruptcy.
Debts Discharged After Filing For Chapter 7
After discharge from chapter 7, there are some debts that are discharged from your life. You may have medical bills loan, credit card debts, personal loans, lease contract loans, and other unsecured loans. These debts are legally discharged from your life where the creditor has no way to collect from you.
What Happens in Your Personal Life After Bankruptcy
Bankruptcy is devastating and disaster in financial life. You may try heart and soul to be okay financially. But there are some changes in terms of financial life. No financial body is going to make a relation with you like mortgage loan, offer a credit card full of facilities and some critical bindings to offer you different types of loans.
Discharge from court and credit not get a dollar from you. In case you face any wrong doing from the creditor, bankruptcy discharge letter paper work to show and submit any moment, some may go when case no, filing date and discharge date, hire an attorney to deter your creditor
As you have filed for chapter 7 and somehow discharged from this chapter. Now it is time to go forward as there is no issue to be worried because the court already has notified the creditors and they are not legally allowed to sue you for their debts.
More importantly, you need to keep the discharge documents to make sure you can show them at any moment. You may also inform them you have legit discharge letter with the case number, filing date, and discharge date. In case they insist, you can inform your attorney who can take effective steps to save you.
What Happens in Your Credit Life?
It is common to believe that there is drastically hit to your credit life after bankruptcy chapter 7. The credit report may go to your creditors, mortgage lenders, insurance companies and landlords about your financial condition. The report can notify them about what your condition is and they make decision for further relation with you. The status of bankruptcy will remain on your credit report for up to 10 years. So there are few changes in your credit life-
- Decreasing your credit score
- Some credit score companies may offer some chances when you have got a discharge letter.
- Purchasing a car on improved credit terms in a year or after two years.
- Mortgage loan within 4 years of bankruptcy in case there is no issue of foreclosure
Upgrade Credit Report
After bankruptcy, your credit score will have a hit and you need to try a little to improve your credit history. It is important to avoid unnecessary spending to make you far away from any other bankruptcy.
Part of improving your credit score, it is better to get a secured credit card from a bank. You can deposit your money to the bank so that it can be collateral for the bank. This can be a good technique to rebuild your credit score. Every payment is reported to your credit card and you have to check the payment history. More importantly, this regular checking can notify in case there are any mistakes. There should not be any mistake in dealing with your credit card.
However, the best important suggestion is that you rebuild your credit report because so many companies are ready to go as they have already known that you have got a discharge letter from the court. But you don’t pay heed to them because getting more credit cards means extending your spending on credit cards.
But it is not difficult to stay on your budget which should be used to make money and save for future financial relations like mortgage loan from mortgage companies that deal with bankruptcies, car loans, and insurance and so on.
What Happens to Mortgage After Filing For Bankruptcy Chapter 7?
Homeowners have major concerns over chapter 7 as bankruptcy affects the mortgage. There are different views in terms of filing chapter 7. The mortgage lenders may not increase the interest rate. On the other hand, the homeowners may lose their house bought on a mortgage which is really a shocking issue indeed. Additionally, some mortgages companies don’t go hard to lend loans to the people who filed for chapter 7.
Chapter 7 Bankruptcy and Mortgage
As you have filed for chapter 7 bankruptcy and your home may be exempt. The good thing is to continue your payment on a mortgage loans in case you want to own your home. Generally, bankruptcy may discharge your personal liability for the mortgage loan when the case is at the end. If you don’t make any payment or stop in the middle, the lender may foreclose your property.
Know if Your Home is Exempt
It is important to know that your home is exempt or not. Under chapter 7 most of the debts are discharged and the trustee can only sell your non-exempt property and pay the unsecured creditors. However, your home is non-exempt equity, it is sure to believe that you are losing your home.
So you must do something that can protect your home. For this, you can turn your home with a bankruptcy exemption. In this term, you need to study state or federal law in which property is exempt and non-exempt.
Chapter 7 is the most common bankruptcy to get relief from creditors. There are so many important issues that happen in a bankruptcy people’s life. The good important thing to advise people who filed for bankruptcy chapter 7 should understand how to rebuild their financial life in the future.
It is needless to say that a little study and information on this tough legal issue can help you protect your property and your business. Some portion of your property may be exempt where there is no scope to sell by the trustee even if your creditors may insist on. You have a legal order named as a discharge which can save you keep your property as own. But a little mistake can cause a bad history in your life. So you need to be prepared as much as possible about ins and outs of the bankruptcy process commonly for chapter 7.