Chapter 7 Bankruptcy Attorney in New Orleans
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Chapter 7 will protect you from the harassment of creditors. Once you have filed for bankruptcy, your creditors are not permitted to contact you or ask for payment on outstanding debts. By the end of the process, your debts should either be discharged or eliminated, providing you with the fresh financial start that you so desperately need.
Many clients have an irrational fear of filing for bankruptcy protection. However, in most cases this fear is unwarranted. Every single day, we meet with clients and change their understanding of the bankruptcy process. Additionally, we review each client’s unique case and guide them down the path that best suits their needs. We will do everything within our power to help you move forward with your case with confidence.
Our mission is to provide excellent consumer bankruptcy counsel. In order to do so, we work hand in glove with clients who need to gather the appropriate paperwork and get it filled out properly. As your attorneys, we will analyze your financial situation and recommend legal remedies.
Big Easy Law Group will help you find effective financial solutions to your debt. Proudly representing clients throughout Metairie, St. Tammany Parish, Covington, Mandeville, Slidell, LaPlace, and beyond, call (504) 229-0679 to schedule your complimentary consultation.
Q:What is a Chapter 7 and how does it work?
A:In a Chapter 7 case, a debtor turns in their nonexempt property to a trustee, who then converts the property to cash and pays the debtor's creditors. If the debtor pays the filing fee and obeys the court's orders, he or she can receive this kind of discharge.
Q:What is a Chapter 7 discharge?
A:A discharged debt is a debt that the debtor is no longer required to pay. After a discharge, creditors will no longer be permitted to make any attempts at collecting money from the debtor. Some debts cannot be discharged and some individuals are not eligible for certain discharges.
Q:What debts are not dischargeable under Chapter 7?
A:The following types of debt are not dischargeable under Chapter 7:
Most tax debts and debts that were incurred to pay federal tax debts.
Debts for obtaining money, property, services, or credit by means of false pretenses, fraud, or a false financial statement, if the creditor files a complaint in the case (included here are debts for luxury goods or services and debts for cash advances made within 90 days of the case being filed.)
Debts not listed on the debtor's Chapter 7 forms, unless the creditor actually knew of the bankruptcy filing in time to file a claim and subsequently failed to timely do so.
Debts for fraud, embezzlement, or larceny, if the creditor files a complaint in the case.
Debts for alimony, maintenance, or support and, if the creditor files a complaint in the case, certain other divorce related debts including property settlement debts.
Debts for intentional or malicious injury to persons or property of another, if the creditor files a complaint in the case.
Debts for certain fines and penalties.
Debts for educational benefits and student loans that became due within the last 10 years, unless a court finds that not discharging the debt would impose an undue hardship on the debtor and his or her dependants.
Debts for personal injury or death caused by the debtor's operation of a motor vehicle while intoxicated.
Debts that were or could have been listed in a previous bankruptcy case of the debtor in which the debtor did not receive a discharge.
Q:Who is eligible for Chapter 7?
A:Anyone who lives, does business, or owns property in the United States may file under Chapter 7. The only exception is if that individual was involved in a different bankruptcy case that has been dismissed within the last 180 days (also note that a husband and wife may file jointly for Chapter 7).
Q:Who is not eligible for a Chapter 7 discharge?
A:The following persons are not eligible for a Chapter 7 discharge:
A person who has been granted a discharge in a Chapter 7 case filed within the last seven years.
A person who has been granted a discharge in a Chapter 13 case filed within the last seven years, unless 70 percent or more of the "unsecured" claims were paid in the Chapter 13.
A person who files a waiver of discharge that is approved by the court in the Chapter 7 case.
A person who conceals, transfers, or destroys his or her property with the intent to defraud his or her creditors or the trustee in the Chapter 7 case.
A person who conceals, destroys, or falsifies records of his or her financial condition or business transactions.
A person who makes false statements or claims in the Chapter 7 case, or who withholds recorded information from the trustee.
A person who fails to satisfactorily explain any loss or deficiency of his or her assets.
A person who refuses to answer questions or obey orders of the bankruptcy court, either in his or her bankruptcy case or in the bankruptcy case of a relative, business associate, or corporation with which he or she is associated.
Q:Who should not file under Chapter 7?
A:A person who is not eligible for a Chapter 7 discharge should not file under Chapter 7. Also, a person who has substantial debts that are not dischargeable under Chapter 7 should not file under Chapter 7. In addition, it may not be wise for a person with current income sufficient to repay a substantial portion of his or her debts within a reasonable period to file under Chapter 7, because the court may dismiss the case as constituting an abuse of Chapter 7.
Q:Where is a Chapter 7 case filed?
A:In the office of the clerk of the bankruptcy court in the district where the debtor has resided or maintained a principal place of business for the greatest portion of the last 180 days. The bankruptcy court is a federal court and is a unit of the United States District Court.
Q:When should a Chapter 7 case be filed?
A:The answer depends on the status of the debtor's dischargeable debts, the nature and status of the debtor's nonexempt assets, and the actions taken or threatened to be taken by the debtor's creditors. The following rules should be followed:
Don't file under Chapter 7 until all anticipated debts have been incurred, because it will be another seven years before the debtor is again eligible for a Chapter 7 discharge. For example, a debtor who has incurred substantial medical expenses should not file under Chapter 7 until the illness or injury has either been cured or covered by insurance, as it will do little good to discharge, say, $50,000 of medical debts now and then incur another $50,000 in medical debts in the next few months.
Don't file under Chapter 7 until the debtor has received all nonexempt assets to which he or she may be entitled. If the debtor is entitled to receive an income tax refund or a similar nonexempt asset in the near future, he or she should not file under Chapter 7 until after the refund or asset has been received and disposed of. Otherwise, the refund or asset will become the property of the trustee.
Don't file under Chapter 7 if the debtor expects to acquire property through inheritance, life insurance or divorce in the next 180 days, because the property will have to be turned over to the trustee unless such property falls under an exemption.
If hostile creditor action threatens a debtor's exempt assets or future income, the case should be filed immediately to take advantage of the automatic stay that accompanies the filing of a Chapter 7 case. If a creditor has threatened to attach a garnishee the debtor's wages or if a foreclosure action has been instituted against the debtor's residence, it may be necessary to file a Chapter 7 case immediately in order to protect the debtor's interest in the property.
Q:How does filing a Chapter 7 affect collection and other legal proceedings that have been filed against the debtor in other courts?
A:The filing of a Chapter 7 case automatically stays (stops) virtually all collection and other legal proceedings pending against the debtor. A few days after a Chapter 7 case is filed, the court mails a notice to all creditors ordering them to refrain from any further action against the debtor. If necessary, this notice may be served earlier by the debtor or the debtor's attorney. Any creditor who intentionally violates the automatic stay may be held in contempt of court and may be liable to the debtor in damages. Criminal proceedings and actions to collect alimony, maintenance, or support from exempt property or property acquired by the debtor after the Chapter 7 case was filed are not affected by the automatic stay. The automatic stay also does not protect co-signers and guarantors of the debtor, and a creditor may continue to collect debts of the debtor from those persons after the debtor files a Chapter 7 case.
Q:May a person file under Chapter 7 if his or her debts are being administered by a financial counselor?
A:Yes. A financial counselor has no legal right to prevent anyone from filing under Chapter 7.
Q:How does filing under Chapter 7 affect a person's credit rating?
A:It will "usually" worsen it, if that is possible. However, some financial institutions openly solicit business from persons who have recently filed under Chapter 7, apparently because it will be at least seven years before the debtor can again file under Chapter 7. If there are compelling reasons for filing under Chapter 7 that are not within the debtor's control (such as illness or an injury), some credit rating agencies and creditors may take that into account in rating the debtor's credit after filing.
Q:Will my name be published if I file for Chapter 7?
A:When a Chapter 7 case is filed, it becomes a public record and the name of the debtor may be published by some credit-reporting agencies. Note that the fact that you have filed bankruptcy may appear in the Sunday financial section of the local newspaper.
Q:Are employers notified of Chapter 7 cases?
A:Employers are not usually notified when a Chapter 7 case is filed. However, the trustee in a Chapter 7 case often contacts an employer seeking information as to the status of the debtor's wages or salary at the time the case was filed. If there are compelling reasons for not informing an employer in a particular case, the trustee should be so informed and he or she may be willing to make other arrangements to obtain the necessary information.
Q:Does a person lose all of his or her property by filing under Chapter 7?
A:Usually not. Certain property is exempt by law and cannot be taken by creditors, unless it is encumbered by a valid security interest. A debtor is usually allowed to retain his or her exempt property in a Chapter 7 case. A debtor may also be allowed to retain certain encumbered (or secured) exempt property (see "What secured property may a debtor retain or redeem in a Chapter 7 case?" below.)
Q:May employers or governmental agencies discriminate against persons who file under Chapter 7?
A:No. It is illegal for either private or governmental employers to discriminate against a person as to employment solely because that person has filed under Chapter 7. It is also illegal for local, state, or federal governmental units to discriminate against a person as to the granting of licenses (including a drivers license), permits, student loans, and similar grants because that person has filed under Chapter 7.
Q:What happens after the first meeting of the creditors?
A:After the meeting of the creditors, the trustee may contact the debtor regarding the debtor's property, and the court may issue certain orders to the debtor. These orders are sent by mail and may require the debtor to turn certain property over to the trustee, or provide the trustee with certain information. If the debtor fails to comply with these orders, the case may be dismissed and the debtor denied a discharge.
Q:What is a trustee in a Chapter 7 case, and what is their role?
A:The trustee is an officer of the court, appointed to examine the debtor, collect the debtor's nonexempt property, and pay the expenses of the estate and the claims of creditors. In addition, the trustee has certain administrative duties in a Chapter 7 case and is the officer in charge of seeing to it that the debtor performs the required duties in the case. A trustee is appointed in a Chapter 7 case, even if the debtor has no nonexempt property.
Q:When must a debtor appear in court in a Chapter 7 case and what happens there?
A:The first court appearance is for a hearing called the "meeting of the creditors." This hearing usually takes place about a month after the case is filed. At this hearing the debtor is put under oath and questioned about his or her debts and assets by the hearing officer or trustee.
Q:What are the debtor's responsibilities to the trustee?
A:The law requires the debtor to cooperate with the trustee in the administration of a Chapter 7 case, including the collection by the trustee of the debtor's nonexempt property. If the debtor does not cooperate with the trustee, the Chapter 7 case may be dismissed and the debtor may be denied a discharge.
Q:What happens to the property that the debtor turns over to the trustee?
A:It is usually converted to cash, which is used to pay the fees and expenses of the trustee and to pay the claims of unsecured creditors.
Q:What if the debtor has no nonexempt property for the trustee to collect?
A:If, from the debtor's chapter 7 forms, it appears that the debtor has no nonexempt property, a notice will be sent to the creditors advising them that there appears to be no assets from which to pay creditors and that it is unnecessary for them to file a claim, and that if assets are later discovered they will be given the opportunity to file claims. This type of case is referred to as a "no-asset" case. Approximately one-half of all Chapter 7 filings are no-asset cases.
Q:How are "secured creditors" dealt with in a Chapter 7 case?
A:Secured creditors are creditors with valid mortgages or liens against property of the debtor. Property of the debtor that is encumbered by a valid mortgage or lien is called secured property. A secured creditor is usually permitted to repossess or foreclose its secured property, unless the value of the secured property greatly exceeds the amount owed to the creditor. The claim of a secured creditor is called a secured claim and secured claims must be collected from or enforced against secured property. Secured claims are not paid to the trustee. A secured creditor must prove the validity of its mortgage or lien and obtain a court order before repossessing or foreclosing on secured property. The debtor should not turn any property over to a secured creditor until a court order is obtained. The debtor may be permitted to retain or redeem certain types of secured personal property.
Q:How are "unsecured creditors" dealt with in a Chapter 7 case?
A:An unsecured creditor is a creditor without a valid lien or mortgage against property of the debtor. If the debtor has nonexempt assets, unsecured creditors may file claims with the court within 90 days after the first date set for the meeting of the creditors. The trustee will examine these claims and file objections to those deemed improper. When the trustee has collected all of the debtor's nonexempt property and converted it to cash, and when the court has ruled on the trustee's objections to improper claims, the trustee will distribute the funds in the form of a dividend to the unsecured creditors, according to the priorities set forth in the Bankruptcy Code. Administrative expenses, claims for wages, salaries, and contributions to employee benefit plans, claims for the refund of certain deposits, claims for alimony, maintenance, support and tax claims are given priority, in that order, for the payment of dividends by the trustee. If there are funds remaining after the payment of these priority claims, they are distributed pro rata to the remaining unsecured creditors.
Q:What secured property may a debtor retain or redeem in a Chapter 7 case?
A:A debtor may retain and redeem certain secured personal and household property, such as household furniture, appliances and goods, wearing apparel, and tools of the trade, without payment to the secured creditor, if the property is exempt and if the mortgage or lien against the property was not incurred for the purpose of financing the purchase of that property. A debtor may also retain and redeem without payment to the secured creditor any secured property that is both exempt and subject only to a judgment lien. Finally, a debtor may redeem certain exempt personal, family, or household property by paying to the secured creditor an amount equal to the value of the property, regardless of how much is owed to the creditor. Deadlines are imposed on the enforcement of these rights by the debtor during the bankruptcy case.
Q:May a utility company refuse to provide service to a debtor if the company's utility bill is discharges under Chapter 7?
A:If, within 20 days after a Chapter 7 case is filed, the debtor furnishes a utility company with a deposit or other security to insure the payment of future utility services, it is illegal for a utility company to refuse to provide future utility service to the debtor, or to otherwise discriminate against the debtor, if is bill for utility service is discharged in the Chapter 7 case.
Q:What should the debtor do if he or she moves before the Chapter 7 case is closed?
A:The debtor should immediately notify the bankruptcy court in writing of the new address. Because most communications between a debtor and the court are by mail, it is important that the bankruptcy court always have the debtor's current mailing address. Otherwise, the debtor may fail to receive important notices and the chapter 7 case may be dismissed. Many courts have change of address forms for debtors to use when they move, and the debtor should obtain one if a move is planned.
Q:How is a debtor notified when his or her discharge has been granted?
A:Usually by mail. Most courts send a form called "Discharge of Debtor" to the debtor and to all creditors. This form is a copy of the court order discharging the debtor from his or her dischargeable debts, and it serves as notice that the debtor's discharge has been granted. It is usually mailed about four months after a Chapter 7 case is filed.
Q:What if a debtor wishes to repay a dischargeable debt?
A:A debtor may repay as many dischargeable debts as desired after filing under Chapter 7. By repaying one creditor, a debtor does not become legally obligated to repay any other creditor. Then only dischargeable debt that a debtor is legally obligated to repay is one for which the debtor and the creditor have signed what is called a "reaffirmation agreement." If the debtor was not represented by an attorney in negotiating the reaffirmation agreement with the creditor, the reaffirmation agreement must be approved by the court to be valid. If the debtor was represented by an attorney in negotiating the reaffirmation agreement, the attorney must file the agreement and the attorney's statement with the court in order for the agreement to be valid. If a dischargeable debt is not covered b a reaffirmation agreement, a debtor is not legally obligated to repay the debt or has waived the discharge of the debt.
Q:How long does a Chapter 7 case last?
A:A Chapter 7 case begins with the filing of the case and ends with the closing of the case by the court. If the debtor has no nonexempt assets for the trustee to collect, the case will most likely be closed shortly after the debtor receives his or her discharge, which is usually about four months after the case is filed. If the debtor has nonexempt assets for the trustee to collect, the length of the case will depend on how long it takes the trustee to collect the assets and perform his or her duties in the case. Most consumer cases with assets last about six months, but some can last considerably longer.
Q:What should a person do if a creditor later attempts to collect a debt that was discharged under Chapter 7?
A:When a Chapter 7 discharge is granted, the court enters an order prohibiting the debtor's creditors from later attempting to collect any discharged debt from the debtor. Any creditor who violates this court order may be held in contempt of court and may be liable to the debtor in damages. If a creditor later attempts to collect a discharged debt from the debtor, the debtor should give the creditor a copy of the order of discharge and inform the creditor in writing that the debt has been discharged under Chapter 7. If the creditor persists, the debtor should contact an attorney. If a creditor files a lawsuit against the debtor on a discharged debt, it is important not to ignore the matter, because even though a judgment entered against the debtor on a discharged debt can later be nullified, such may require the services of an attorney, which could be costly to the debtor.
Q:What is the role of the attorney for a consumer in a Chapter 7 case?
A:The debtor's attorney performs the following functions in the Chapter 7 case of a typical consumer debtor:
Analyze the amount and said nature of the debts owed by the debtor and determines the best remedy for the debtor's financial problems.
Advise the debtor of the relief available under both Chapter 7 and Chapter 13 of the Bankruptcy Code, and of the advisability of proceeding under each chapter.
Assemble the information and data necessary to prepare the Chapter 7 forms for filing.
Prepare the petitions, schedules, statements, and other Chapter 7 forms for filing with the bankruptcy court.
Assist the debtor in arranging his or her assets so as to enable the debtor to retain as many of the assets as possible after the Chapter 7 case.
Filing the Chapter 7 petitions, schedules, statements, and other forms with the bankruptcy court, and, if necessary, notifying certain creditors of the commencement of the case.
If necessary, assisting the debtor in reaffirming certain debts, redeeming personal property, setting aside mortgages or liens against exempt property, and otherwise carrying out the matters set forth in the debtor's statement of intention.
Attending the meeting of the creditors with the debtor and appearing with the debtor at any other hearings that may be held in the case.If necessary, preparing and filing amended schedules, statements, and other documents with the bankruptcy court in order to protect the rights of the debtor.
If necessary, assisting the debtor in overcoming obstacles that may arise to the granting of a Chapter 7 discharge.