What Your Rights Are as an Individual After Filing Chapter 7 Bankruptcy

Saturday, October 10, 2020, 6:00 AM | Leave Comment

Filing for Chapter 7 bankruptcy may be an effective way to eliminate unsecured debts in a relatively short period of time.

However, you may be able to start reaping the benefits of bankruptcy before your case is discharged.

Let’s look at some of the rights that you have from the moment that you file for protection from creditors.

  • You’ll Receive an Automatic Stay of Creditor Activity

    As soon as you file for bankruptcy, you will receive an automatic stay that is typically good for the duration of your case. While the stay is in effect, creditors cannot call or write letters attempting to collect what they are owed. Creditors may also be barred from filing a lawsuit, beginning the foreclosure process or taking any other step to seek repayment of an outstanding debt.

  • Property May Be Exempt From Liquidation

    In a Chapter 7 case, your assets may be sold at an auction or by other means, and the money raised from the sale of your property will be used to pay your creditors. However, some property may be exempt by state or federal law from being liquidated in a Chapter 7 proceeding. Typically, your vehicle, equity in your home and other items that you may need to maintain a reasonable standard of living are exempt from being sold.

  • You Have the Right To Be Represented By an Attorney

    A bankruptcy attorney may be willing to represent your interests during a Chapter 7 proceeding. If you do hire legal counsel, your creditors must direct any questions that they have about your case to this person. An attorney may work with the trustee or the judge overseeing the case on your behalf or file motions on your behalf if a creditor violates the automatic stay.

  • It May Be Possible to Have the Filing Fee Waived

    To file for Chapter 7 bankruptcy, you must pay a fee of $335. However, if you make less than 150% of the federal poverty threshold, you may be entitled to file a Chapter 7 petition for free. Your attorney may be able to provide more insight into the process of having the filing fee waived.

While filing for bankruptcy may have a negative impact on your credit, it can be beneficial as well. After a debt is discharged, a creditor can no longer pursue payment, which means that you have more money available to save or pay down other debts.

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