Can Filing Chapter 7 Stop Creditors from Calling?
Bankruptcy Attorneys in Kansas Discuss What Happens Once You File
Filing a petition under Chapter 7 generally “automatically stays” (stops) most collection actions against the debtor or the debtor’s property. However, filing the petition does not stay certain types of actions listed under 11 U.S.C. § 362(b) and may be effective only for a short time in some situations. The stay arises by operation of law and requires no judicial action. As long as the stay is in effect, creditors generally may not initiate or continue lawsuits, wage garnishments, forward collection letters or even make telephone calls demanding payment.
Between 20 and 40 days after the petition is filed, the case trustee will hold a meeting of creditors. During this meeting, the trustee puts the debtor under oath and both the trustee and creditors may ask questions. The debtor must attend the meeting and answer questions regarding the debtor’s financial affairs and property. It is not very often, however, for creditors to actually appear at these meetings. Unless the creditors’ meeting is continued, which can occur if the debtor fails to provide information requested, the trustee has 10 days to report to the court whether the case should be presumed to be an abuse under the means test described in 11 U.S.C. § 704(b).
Unless an interested party files a complaint or there are any special circumstances, most Chapter 7 cases
receive discharges only a few months after
the meeting of creditors.
Chapter 7 Discharge Timeline
A discharge releases individual debtors (corporations can file under Chapter 7, but they do not receive a discharge) from personal liability for most unsecured debts and prevents the creditors owed those debts from taking any collection actions against the debtors. Excluding cases dismissed or converted, individual debtors receive a discharge in more than 99 percent of Chapter 7 cases. In most cases, unless a party in interest files a complaint objecting to the discharge or a motion to extend the time to object, the bankruptcy court will issue a discharge order relatively early in the case – generally, 60 to 90 days after the date first set for the meeting of creditors.
The grounds for denying an individual debtor a discharge in a Chapter 7 case are narrow. Among other reasons, the court may deny the debtor a discharge if it finds that the debtor:
- Failed to keep or produce adequate books or financial records
- Failed to explain satisfactorily any loss of assets
- Committed a bankruptcy crime, such as perjury
- Failed to obey a lawful order of the bankruptcy court
- Failed to disclose all debts and assets
- Fraudulently transferred, concealed or destroyed property that would have become property of the estate
- Failed to complete an approved instructional course concerning financial management
Chapter 7 Special Circumstances
Can the court revoke by bankruptcy discharge?
The court may deny or revoke a Chapter 7 discharge on the request of the trustee, a creditor or the U.S. Trustee if the debtor obtained the discharge through fraud. A revocation of a Chapter 7 bankruptcy can occur if the debtor:
- Acquired property that is property of the estate and knowingly and fraudulently failed to report the acquisition of such property or to surrender the property to the trustee
- Made a material misstatement without a satisfactory explanation
- Failed to provide documents or other information in connection with an audit of the debtor’s case
Can I change from Chapter 7 to a different Chapter bankruptcy?
To provide the debtor the most appropriate relief, the Bankruptcy Code allows the debtor to convert a Chapter 7 bankruptcy case to a case under Chapter 11, 12 or 13 as long as the debtor is eligible to be a debtor under the new chapter. However, a condition of the debtor’s voluntary conversion is that the case has not previously been converted to Chapter 7 from another chapter. If so, the debtor cannot convert the case repeatedly from one chapter to another.
Can I file for Chapter 7 if I have a judgment against me?
If a creditor has sued you for money you may owe and a judge entered a judgment against you because you did not respond to the lawsuit or lost the suit, you have the option to file for bankruptcy. Bankruptcy places an automatic stay on collection efforts. It may allow you to legally discharge the creditor’s ability to enforce the judgment against you. In this situation, it may be helpful to talk with an attorney who specializes in consumer bankruptcy. That way, you can make sure that you protect any property you have from liens and repossession.
Can I File Chapter 7 without a Lawyer?
While it is possible to file bankruptcy without the assistance of an attorney, called “pro se,” it is often difficult to do so successfully. The rules that govern bankruptcy are extremely technical and follow strict deadlines. If you perform any action incorrectly, it could result in long-term legal and financial consequences that may require you to hire an attorney to remedy.
It is important that you discuss your situation with a qualified Chapter 7 bankruptcy lawyer. That way, you can make sure you explored all your options, that you avoid bankruptcy fraud and that you stop creditors from calling. You have the legal ability to live free of heavy debt burdens. Our attorneys can help you realize all the benefits you can receive under the bankruptcy process. The Sader Law Firm is committed to finding the type of debt relief that is right for your unique situation. Call or email a Sader Law Firm bankruptcy attorney to schedule a free phone discussion.