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What Really Happens After Filing for Chapter 7 Bankruptcy

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The immediate effects of filing for Chapter 7 bankruptcy protection are extremely positive:

  • Collection calls, repossessions, and any foreclosure proceedings stop.
  • You receive 4to 6 months to put together a plan to rebuild your finances without needing to worry about losing everything. This is the period when the federal bankruptcy court reviews your filings.

It’s important to understand these benefits and how they will help you restructure your finances and lead you in the right direction to a better future. Too many people put off seeking bankruptcy protection for too long. They view declaring bankruptcy as a personal failure rather than what it truly is, which is an opportunity to start over.

Columbus Chapter 7 bankruptcy clients need to remember that some of their debts will remain even after they receive a discharge. Although many debts are dischargeable in a Chapter 7, going through this process will not discharge balances on

  • Unpaid child and spousal support,
  • Student Loans (Discharge requires proof of financial hardship)
  • Balances owed on fines and fees to municipalities,
  • Past-due taxes within the last three years, or
  • Fines from criminal activity

While these types of debts will remain, it is also possible to negotiate with creditorsto reduce the amounts owed, extend the length of time available for repaying, and lower the amount of the monthly installment payments. Chapter 7 bankruptcy clients should know that they can rely on their lawyer for advice and representation as they negotiate with creditors.

Reaching mutually agreeable arrangements for paying off creditors is made easier by the fact that a Chapter 7 bankruptcy usually results in a discharge of these debts:

  • Medical bills,
  • Credit cards,
  • Personal and signature loans, and
  • Balances due on secured items like cars and a house.

Note that a condition for having car and home loans discharged is surrendering the vehicle and moving out of the house. That may seem harsh, but a repossession or foreclosure would result in both the loss of the item and the continued existence of the debt.

The last two things to expect after filing for Chapter 7 bankruptcy protection in Ohio or elsewhere are more paperwork and at least one court appearance. Receiving bankruptcy protection requires completing and submitting numerous federal court forms, as well as collecting, organizing, and sharing multiple types of financial records. These filings will all be taken care of by Columbus Chapter 7 bankruptcy attorney.

Then, before issuing a final decision, the court requires a meeting take place with a trustee. During that hearing, creditors have the right to show up and ask questions, although they very rarely do. This hearing is usually done in a short amount of time and having an experienced lawyer helps make this process go smoothly.

About the Author: Sonia Walker is the Colubus based bankruptcy attorney helps residents of Ohio navigate the personal bankruptcy process and guides them toward rebuilding their credit and finances.