Chapter 7 Bankruptcy
Attorney in Colorado Springs

Debt Relief for a Fresh Start

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Some words can create fear just by being spoken. Bankruptcy is one of them.

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In order to maintain their dignity and self-respect, most people will delay declaring bankruptcy as long as possible. In spite of this, there's nothing to be ashamed of. In the face of life's curveballs, bankruptcy is just another financial option.

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We live in an unpredictable world. Experiencing an unexpected event can have a significant impact on your finances. No matter how hard you try, unpaid bills can pile up. In the wake of the Covid-19 pandemic, many people faced unemployment, overdue mortgages, and shattered finances.

 

The concept of bankruptcy has been around since the birth of our country. Our original Constitution, ratified in 1788, provided for a bankruptcy court to protect people from the English legal system that sent people who couldn't pay their bills to debtors' prisons. Since those early days, many famous people have used the bankruptcy system to reset their finances and get their lives back, people like Abraham Lincoln, Henry Ford (twice), Walt Disney, Mike Tyson, Nicolas Cage, and Donald Trump (a whopping SIX times). Even the bankruptcy guru himself, David Ramsey, utilized bankruptcy to get out from under several ill-advised real estate loans early on in his investing career. He's since gone on to rebuild his wealth to over $200 million through a career primarily dedicated to helping others through the financial mishaps he personally experienced. 

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What Is Chapter 7 Bankruptcy?

 

Chapter 7 of the United States Bankruptcy Code is a Federal law that helps people who can't pay their debts.

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By asking the judicial system for help, you can avoid the results of spiraling debt, which may include depression, relationship trouble, and anxiety.

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When you declare Chapter 7 bankruptcy, an "automatic stay" goes into effect. This is one of the most powerful tools of the bankruptcy system that prevents your creditors from taking legal actions against you like garnishing your wages, repossessing your car, foreclosing on your house, or seizing your property without the court's permission.

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When you file for bankruptcy, you ask the court to discharge or "forgive" your unpaid debts, such as credit card debts, loans, and medical bills.

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Some debts cannot be discharged in bankruptcy. These are called "priority" debts and include things like taxes, student loans, and child support payments. If you file for Chapter 7 bankruptcy, you may be able to keep any property that the court classifies as exempt from creditors.

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Should I File for Chapter 7 Bankruptcy?

 

To see if you should file for Chapter 7, compare your monthly debt payments to your monthly disposable income. If your income is low but your debt is getting bigger, then a Chapter 7 filing could be the best option to help you start over.

 

When it's all said and done, if your credit card bills are soaking up more than half your monthly income, Chapter 7 might be the right solution for you.

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In addition to the financial frustrations, having a lot of debt a forseeable way to pay it off can cause a lot of emotional problems as well. These can include not being able to sleep, having anxiety attacks, feeling hopeless about your life, and creating secondary relationship issues. If you are experiencing these things because of your finances, you should speak to a Chapter 7 bankruptcy lawyer to see if there is anything you can do to improve your financial situation.

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Even though the process is typically pretty straightforward, there are some twists and turns that can significantly affect how much money you end up with at the end of the bankruptcy process. Overall, it's best to get help from an experienced bankruptcy attorney to guide you through the system. They will review your finances, help you choose the right Chapter, file for bankruptcy on your behalf, and make sure you get the most out of your case. You'll have the peace of mind that everything has been done correctly and your filing goes as smoothly as possible.

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Once you've decided to file for Chapter 7 bankruptcy, the next step is to take a court-designated credit counseling course. This will help you understand how to manage your money and debts going forward. Once you've completed your course, you and your attorney will then proceed with the actual filing to start the official bankruptcy proceedings.

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Credit Counseling Course

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The first step in filing for Chapter 7 bankruptcy is to take a credit counseling course. This course must be completed before you file and you will need to provide a certificate of completion to prove that you have completed the course. Completing this course is necessary before any of your debts can be discharged.

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Taking a credit counseling course is not just something the court makes you do. The goal of the court is for you to get your finances in order. They don't want you to find yourself in the same position a few years from now. By teaching you about income, expenses, taxes, fees, interest rates, and credit cards, they are giving you powerful tools-tools that you can use to help yourself in the future.

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Filing for Chapter 7

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When you file for Chapter 7 bankruptcy, your creditors will have to stop trying to take your money and assets. This will stop the stressful phone calls and emails. All of your creditors will have to come before the court to resolve your debts in one process.

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To file for bankruptcy, you need to fill out some forms. On these forms, you will list your income, your debts, and anything else that is yours (rents, leases, other income, pay stubs, etc.). You must be honest on these forms and disclose all of your sources of income. This will help to avoid any problems or surprises later on.

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Your Court Appointed Trustee

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After you file, the court appoints someone who will help take care of your case. This person is called a trustee. The trustee helps with things like the meeting of creditors and making sure everything is done according to the law.

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If you file for bankruptcy properly, the trustee will have an easier time understanding your finances and might be more willing to help you. On the other hand, if you don't file your paperwork correctly or don't disclose all of your income, you can actually end up in a worse situation than you were before. An experienced Chapter 7 bankruptcy attorney can help you fill out all the forms correctly and make sure that everything goes smoothly. This will help the trustee understand your financial situation better.

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The “341 Meeting”, aka the “Meeting of Creditors"

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A big part of filing for Chapter 7 bankruptcy is the "Meeting of Creditors" or the "341 Meeting." About 30 days after you file your petition, the court will schedule this meeting with the trustee. Most creditors don't show up, but it's important for you to go. We call it the meeting with the trustee because that's more accurate than a meeting with creditors and less confusing than referring to Section 341 of the Bankruptcy Code.

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During this meeting, which since COVID is commontly being done over the phone rather than face to face, the trustee will ask you questions to make sure that you understand what you're doing by filing for bankruptcy and that the information on your petition is accurate.

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We understand appearing before a U.S. Trustee in federal court can be an intimidating experience. That's why it's important to have a law firm like The Cross Law Firm that is highly experienced with Colorado Bankruptcy law to help you through the process. We attend every one of these meetings with our clients. We know what to expect and we'll help you through the meeting. You can be confident going into this meeting knowing you have someone by your side who's been through this process thousands of times. If you're honest and open with us and in your petition, the questions asked by the trustee will be a short and straightforward process.

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Your Asset Exemptions

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When you file for bankruptcy in Colorado, an experienced bankruptcy lawyer will help you choose the right exemption. This will protect important assets from being seized and sold to pay your creditors. We will then list the assets you want to claim as exempt. If there is no money to be gained from selling your property, the trustee will not bother trying to sell it. This means you can keep your things.

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If you're current on your payments for things like a car loan, an apartment lease, or a mortgage, you can keep the contract by reaffirming your commitment to making timely payments. This will help you keep your rights to the property. The vast majority of our Chapter 7 petitions end with our clients retaining all their assets, but it depends on the situation. In most cases, we are able to keep all of our client's assets safe from being seized and sold, meaning nothing to ever given over to creditors. We think that asset protection is one of the most important things an experienced Colorado bankruptcy lawyer can offer to someone filing for bankruptcy.

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The Final Decision

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The court will decide how many of your debts will be forgiven and which ones, if any, will have to be paid. The court may also sell some of your belongings to pay off your debts. Once this is done, the court issues a document called a "Chapter 7 discharge and final decree." This document closes your case.

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The whole process of filing for Chapter 7 bankruptcy usually takes less than six months. With the help of an experienced Colorado Bankruptcy lawyer who knows what they're doing, you could be free from debt and able to restart your life within a few short months.