“How did you go bankrupt?” Bill asked. “Two ways,” Mike said. “Gradually and then suddenly.” – Ernest Hemingway, The Sun Also Rises, 1926.
Chapter 7 bankruptcy can be one of the most efficient and effective ways to resolve unsecured debt. But it’s not for everyone, and there are a lot of myths about bankruptcy creating confusion for people looking for help with their debt.
The best way to get information about whether Chapter 7 bankruptcy might be the solution for you is to talk to an experienced bankruptcy attorney. At Cohen & Cohen, P.C., we have extensive experience with the Chapter 7 bankruptcy process, and with other types of debt resolution. We offer a free debt evaluation to help you determine whether bankruptcy would be right for you, and which type would best suit your needs. You can schedule yours right now by calling 303.933.4529 or filling out our contact form.
The information on this page will give you a general overview of how Chapter 7 bankruptcy works and what types of debt it can help resolve.
How Does Chapter 7 Bankruptcy Help?
In Chapter 7 bankruptcy, most types of unsecured debt can be discharged. When a debt has been discharged in bankruptcy, you are no longer legally obligated to pay it. The creditor can’t sue you or take other action against you. They can’t even call you and demand payment.
Some types of debt that are frequently discharged in Chapter 7 bankruptcy include:
- Credit card debt
- Medical Bills
- Payday Loans
- Other unsecured personal loans
- Remaining balances after a vehicle repossession
- Old Utility Bills
- Personally Guaranteed business debt, such as landlord debt, MCA’s, and the SBA.
How Does a Chapter 7 Bankruptcy in Colorado Work?
Chapter 7 bankruptcy is sometimes called “liquidation bankruptcy.” That means the bankruptcy trustee can take any non-exempt assets the bankruptcy filer has and sell those assets to make partial payment to creditors.
One of the first things a Colorado bankruptcy lawyer will do if you’re considering Chapter 7 bankruptcy is to go through your assets with you and determine whether you have any non-exempt property. Most people who file Chapter 7 don’t, and so don’t lose any assets in the bankruptcy process.
Filing Chapter 7 Bankruptcy in Colorado
A Chapter 7 bankruptcy case starts with the filing of a bankruptcy petition and schedules detailing your debts, income and assets. All bankruptcy filers in the state of Colorado file in the U.S. Bankruptcy Court for the District of Colorado, which is located at 721 19th Street in Denver. [1]
In most cases, an automatic stay is entered as soon as the bankruptcy petition is filed. The automatic stay prohibits creditors and debt collectors from taking any further action while the order is in effect. The stay even stops lawsuits, wage garnishment and other collection actions that are already in progress.
The 341 Meeting in Chapter 7
After you file bankruptcy, a 341 meeting will be scheduled. This meeting offers creditors an opportunity to appear and ask you questions under oath. That doesn’t usually happen, though. Most 341 meetings are short and simple, and involve only three parties: you, the bankruptcy trustee assigned to your case, and your bankruptcy lawyer.
You will need some documentation for that meeting, though. The trustee will typically want to see documents such as your identification, your recent tax returns, and pay stubs from the past six months. In some cases, the trustee will ask for specific additional information.
During the meeting, the trustee will ask you questions about the information in your petition and schedules, and will also ask questions to verify that your bankruptcy attorney has provided you with all of the required information. In most cases, the meeting lasts only a few minutes.
How Long Does Chapter 7 Bankruptcy Take?
Every case is different, but most Chapter 7 cases can be wrapped up in about four months. The meeting of creditors typically takes place 21-45 days after the petition is filed. Then, creditors have 60 days to file objections. If that 60 day period expires without objections, the court will enter a discharge order. The case will typically be closed shortly after, but in some cases the case may remain open to tie up loose ends like the sale and distribution of non-exempt assets.
Objections are rare, but can seriously complicate a case. Objections should always be handled by an experienced bankruptcy lawyer.
How Can a Colorado Bankruptcy Lawyer Help?
Having an experienced Colorado bankruptcy lawyer on your side from the beginning can make all the difference. For example, your bankruptcy attorney will help you assess whether Chapter 7 bankruptcy is the right solution for you, or whether Chapter 13 might better serve your goals.
When you hire a Colorado bankruptcy attorney at Cohen & Cohen, P.C., your attorney will also ensure that your petitions and schedules are completed correctly and that you are aware of issues many people don’t realize can derail a bankruptcy case. For example, in the months leading up to bankruptcy, you can’t give away property or sell it for less than fair market value, and you can’t decide to pay off a friend or family member in favor of other creditors.
Your bankruptcy lawyer may also anticipate possible creditor objections so you can adapt or be prepared to fight them. And, your Cohen & Cohen attorney will thoroughly prepare you for your meeting of creditors and any other appearances, and help ensure that you have all necessary documentation in order in advance to avoid delays or adverse impact on your case.
Delaying bankruptcy can be stressful and expensive. Sometimes, waiting too long to act has negative consequences, such as vehicle repossession or wage garnishment. You have nothing to lose by educating yourself about your options. Call 303.933.4529 or fill out our contact form today for your free debt evaluation. Our Colorado bankruptcy lawyers help clients across the state from Colorado Springs, to Denver, Boulder, and Grand Junction. We even work with people in remote areas as well.
