On behalf of Law Offices of Kathleen G. Alvarado posted in chapter 7 bankruptcy on Friday, March 2, 2018.

When most Riverside, California, families think of a bankruptcy, they are actually thinking of Chapter 7 bankruptcy. This is the most common type of bankruptcy individual consumers use when they have gotten overwhelmed by debt and need a fresh financial start.

Like all types of bankruptcies, the first thing a debtor who wants to file a Chapter 7 will need to do to start the process is fill out a lot of paperwork which will give the federal bankruptcy court, as well as the trustee that will oversee the process on behalf of the government, a clear picture of the debtor’s financial situation. It is, of course, very important to fill these forms out completely and accurately.

Once this paperwork gets filed, a “stay” automatically goes in to effect, which means that creditors can no longer take collection actions against a debtor until the case is over or until the creditor gets a green light from the court overseeing the case.

The debtor will at some point be expected to appear before the trustee and answer some questions about their finances and property. In many cases, the trustee will determine that the debtor’s assets are all either subject to a security interest, like a mortgage or a secured car loan. In other cases, the trustee may take control of the debtor’s “non-exempt” property and dispose of it in order to pay off creditors.

At the end of the proceeding, and after giving the trustee and the creditors an opportunity to object, the court will officially discharge the debtor from many if not all of his or her debts. At this point, the creditor who owns a “discharged” debt can never try to collect on the debt or otherwise pressure the debtor to pay.