Chapter 7 Bankruptcy Attorney
These are some of the frequently asked questions regarding Chapter 7 Bankruptcy. Just click on the question for the answer. If you cannot find the answer you need below, or have a new question you think might be helpful to others, please contact us for additional help. – Robert C. Russell
Generally, you are protected immediately when the case is filed with the court. Upon filing, the “automatic stay” prohibits all collection efforts including foreclosure, repossession and related legal proceedings including lawsuits and garnishments. Any creditor who intentionally violates this Court ordered “automatic stay” may be liable to the debtor for damages. Please note that not all lawsuits are stopped by filing including criminal proceedings and actions for the collection of alimony, maintenance, or support.
Generally speaking, 98% or more of our clients get to keep all of their assets. The reason for this is that every Debtor gets to keep/protect a certain amount of assets/stuff from the Chapter 7 Trustee and creditors. Protected assets are called “exempt” assets. Simply, very few people have “too much stuff”, i.e., all their assets are “exempt” and protected. Assets that can be protected/exempted under federal bankruptcy law can be found in 11 USC § 522. Assets that can be protected/exempted under Washington state law can be found, in part, under RCW 6.15.010. Note: If you have a financed house or car that you want to keep, you will, of course, have to keep making the payments.
Once the bankruptcy is filed, the entire Chapter 7 process usually takes about three months. During this process, you must attend one “341 Meeting.” The rest of the time (another 60 days), you are usually just waiting for the time to pass until the entry of your Discharge Order.
Generally, obtaining a “discharge” (of debt) is the major reason why people file Chapter 7. A “Discharge Order” is an Order of the Bankruptcy Court that, when entered, releases a debtor from the personal obligation to repay the debtor’s discharged debts. The “Discharge Order” also orders creditors to discontinue attempts to collect on a debt that has been discharged. Check here to see which debts are discharged in Chapter 7.
The basic rule is that all debts are discharged unless they fall into one of the several exceptions found in 11 USC § 523, including, but not limited to:
- Fraud/theft. Debts resulting from a successful effort to obtain money, property, services, or credit using pretenses, fraud, or a false financial statement
- Child support/alimony. Debts for alimony, maintenance, or child support.
- Intentional injury. Debts for intentional or malicious injury to the person or property of another.
- Taxes. Debts for certain taxes such as income and property taxes.
- Fines and penalties. Debts for certain fines or penalties, including traffic tickets, payable to and for the benefit of a governmental unit.
- Student loans. Debts for student loans (unless not discharging the debt would impose an undue hardship on the debtor and the debtor’s dependents).
- Intoxication. Debts arising from a judgment or court decree entered against the debtor for damages resulting from the operation of a motor vehicle while legally intoxicated.
- Credit card/taxes. Credit card balances to the extent that the balance on the card is the result of paying otherwise nondischargeable taxes.
- Certain spousal debts: Debts owed by a debtor to a former spouse that qualifies as a “domestic support obligation.” This includes child support, alimony, and property settlements, including a debtor’s obligation to pay certain debts for the ex-spouse.
- AFDC. Debts owed to a governmental entity to reimburse AFDC payments made to a dependent.
Generally, everyone experiencing financial hardship is eligible for Chapter 7 relief unless:
(a) you have already filed a Chapter 7 bankruptcy and received a discharge in the last eight years,
(b) you have already filed a Chapter 13 bankruptcy and received a discharge in the last six years (unless you paid 70% of your unsecured claims in that case), or
(c) you have primarily consumer debt and you make too much money to qualify for Chapter 7 relief and/or abuse of the bankruptcy system would result if you were released from your debt (i.e., it would not be “fair” for you to be granted a discharge).
A debtor does not generally go to “court”. However, there is an administrative hearing called a “Meeting of Creditors” or “341 Meeting” that occurs about 30-40 days after the case is filed. At this hearing, the Chapter 7 Trustee places the debtor under oath and asks questions about the debtor’s identity, money, property, and debts. Generally, a debtor’s creditors do not attend this hearing. However, if one does, the Trustee will give the creditor only a few minutes to ask a few quick questions. Most 341 Meetings take only 5-10 minutes.
Section 341 Meetings are to allow the Chapter 7 Trustee and any interested parties time to ask you questions. The Court normally schedules about 12 meetings an hour. That means each meeting might take about 5 minutes each. So, yes, it’s pretty quick. We give our clients the expected questions ahead of time so you know what to expect. To be ready for the questions, please review your petition thoroughly ahead of time. Please let us know immediately if you see any errors/corrections or budget updates to make.
Presently, Section 341 First Meetings of Creditors are conducted by phone for health and safety reasons. So, the items debtors used to bring to in-person 341 Meetings are now provided to the Chapter 7 Trustee ahead of the meeting.
[Those items are a picture ID such as a Driver’s License and proof of your Social Security number such as a Social Security Card, an IRS Form W2 or 1099, or anything else that you did not create that shows your full and accurate SSN.]
If and when we return to in-person 341 Meetings, you should be prepared to bring them with you to the 341 Meeting.
The filing fee is presently $338.
A Chapter 7 bankruptcy can be noted on your credit report for 10 years. However, filing bankruptcy does NOT mean that your credit is “ruined” for 10 years. First, credit scores normally rebound after Chapter 7 withing 12 to 24 months. What really matters is what have you done after filing to improve your credit – make sure you make good credit decisions after your bankruptcy completes including making new debt payments on time. Second, it important to remember that you filed because you could not pay your debts on time. If you can’t pay your debts on time, then your credit report can show continue to show the the new missed payments for at least another 7 years. Further, if you can’t pay your debts on time, then creditors can get a judgment. That can allow them to garnish your wages and lien your home. And in Washington, judgments can follow you for ten years AND creditors can renew unpaid judgments for another 10 years. So, you can see that if you need to file bankruptcy, not filing can be much worse for a much longer period.
Most mortgage lenders tell us that after 2-5 years, bankruptcy doesn’t hurt your chances of buying a home. However, you will have to check with various lenders to find out their specific policies. Different lenders have different rules. But is just wrong to say that Chapter 7 prohibits you from obtaining a home loan for any extended period.
Some people argue that filing bankruptcy is taking the easy way out. I suppose that it could be the “easy way out” if you never tried any other way to pay your debts. However, most people try their best to avoid bankruptcy. Some people even sacrifice their health and relationships to pay bills that are beyond their ability to pay. Bankruptcy is a gut-wrenching experience that most people try very hard to avoid.
Also, bankruptcy is a legal remedy made available by your United States’ Constitution. It was recognized by our Founding Fathers that there are certain circumstances where a person or family simply needs relief from their debts. And bankruptcy relief is only available to people that actually qualify for assistance.
Is it wrong to file bankruptcy? No, not if you need the help. You should not be forced into virtual life-long servitude to your creditors because you had a medical emergency, loss of employment, even made bad financial decisions or a worldwide pandemic occurred. Bankruptcy is rarely the first choice. But sometimes it is simply the best choice when all the options are considered.
Bankruptcy is a matter of public record. However, generally, it is not publicized beyond notice to your creditors and co-debtors. Employers and newspapers are NOT generally notified of the bankruptcy.
The following people should expect “problems” in bankruptcy:
(a) Persons who conceal, transfer, or destroy their property with the intent to defraud their creditors or the Trustee in the Chapter 7 case.
(b) Persons who conceal, destroy, or falsify records of their financial condition or business transactions.
(c) Persons who make false statements or claims in their Chapter 7 case, or who withhold recorded information from the Trustee in the case.
(d) Persons who fail to satisfactorily explain any loss or deficiency of their assets.
(e) Persons who refuse to answer questions or obey orders of the Bankruptcy Court, either in their case or in the case of a relative, business associate, or corporation.
(f) Persons who have engaged in pre-filing activity with the intent to defraud creditors.
It is unusual, but it’s possible. There are several ways to lose property in Chapter 7.
The first is if that property is not fully “exempt,” i.e., the value/equity in the property exceeds the amount that you can protect/exempt by law from your creditors. In this case, the Trustee sells the asset, gives you the amount/value that you could exempt, and uses the rest of the money to pay creditors. The second is if you try to hide it from the Chapter 7 Trustee, and the Trustee finds out about it. In that case, you cannot exempt it at all. The trustee sells the asset and gives all the money to creditors. The third way is if the asset is a financed car or house, etc. and you just don’t want it. In that case, you can choose to return the asset (aka “collateral”) and have the debt discharged. The last way is that if you have a financed car or house and you do not continue making payments on it. After the case completes (or before if the creditor asks the court for permission), the creditor can take action to repossess a vehicle and foreclose on a home.
We provide all our clients copies of all documents filed with the court. If you lose them and need copies in the future, you have two options. You can order them from us, and (as with the Court) there is a small charge for us to gather and provide them again. HOWEVER, for new cases filed starting 2021, all clients will have free access to many documents filed with the Court via our online client access portal. Documents available include the Bankruptcy Petition and Discharge Order. If you do not have and want such access, please let us know and we’ll provide information.
The federal Fair Credit Reporting Act requires each of the nationwide consumer reporting agency to provide you with a free copy of your credit report, at your request, once every 12 months. The reports are available on-line here.
Documents filed on and after 5/17/2001 are stored electronically on the court’s computer system (CM/ECF). To obtain copies of these documents, you have the following options:
- Internet (PACER)
Contact the PACER Service Center at www.pacer.gov(link is external) for registration information about obtaining a PACER account. A PACER fee of $0.10 per page applies. Please note: PACER restricts all documents in bankruptcy cases that were filed before 12/01/2003 and have been closed for more than one year. While unavailable to the general public via PACER, copies of restricted documents can be obtained via the public terminals in the clerk’s office lobby in Seattle and Tacoma or via mail request. See Restricted Access to Certain Documents in PACER.
- Visit the Clerk’s office
If you come to the Bankruptcy Court in person for your copies, the copy fee is $0.10 per page when using the computer in the court’s lobby. A copy fee of $0.50 per page applies if a clerk makes the copies. An $11.00 certification fee applies for each document that needs a certification.
Exact cash, cashier’s check or money order is required.
- Mail a request to the Clerk’s office
If you mail a copy request to the Bankruptcy Court, the copy fee is $0.50 per page. Please contact the Clerk’s office to determine the number of pages. An $11.00 certification fee applies for each document that needs a certification.
Each written request should include:
- debtor(s) name and case number
- documents to be copied
- your name (if you are not the debtor) and daytime phone number
- address where the documents should be mailed
The cashier’s check or money order should be made payable to “U.S. Bankruptcy Court.” You may mail your copy request to the Bankruptcy Court at either location:
U.S. Bankruptcy Court U.S. Bankruptcy Court
700 Stewart Street, #6301 1717 Pacific Avenue, #2100
Seattle, WA 98101 Tacoma, WA 98402
I hate to give the lawyer answer, but “it depends”. Our fee for a normal/simple Chapter 7 case is certainly no more than other law firms typically charge. So, how do you choose? Look at our reviews and experience. (See our client testimonials here!) And, yes, we do have payment plans for attorney fees, if needed.
We know that you don’t have a lot of money. That’s why you are here. But just be careful picking an attorney that is cheaper and/or less experienced. It might just cost you more in money, time, stress and/or aggravation. We are hired from time to time to fix problems in some of those cases. Just be careful. And remember … we have payment plans and will work with you and how to pay for the bankruptcy. (See our client testimonials here!)
You don’t have to pay anything to meet with us. The only exception might be those few with more complicated business issues (because they often take more time and have complicated issues). If you drive for Uber or have a small home business, there is no cost to meet. So, if you have the normal car, house, credit card, medical debts etc, it’s no cost to review the issues and options. If you hire us, then the time spent during the initial consult is just included in the normal fee.
“341 Meeting” Questions – Chapter 7
Approximately 30 days after your case is filed, you must “attend” a Section 341 First Meeting of Creditors (“341 Meeting”) where the Trustee will ask you questions about your bankruptcy petition, etc. Listed below are the range of standard questions asked by a trustee. Additional questions may be asked depending on your answers to these questions or particular facts of your case. A 341 Meeting normally takes no more than about 5 minutes.
Sample Questions
- Do you swear to tell the truth under penalty of perjury?
- What is your name and work address?
- Did you read your Bankruptcy petition and schedules before you signed them?
- Did you list all assets and debts?
- Did you list your income and expenses?
- To the best of your knowledge, were petition and schedules true and accurate when you signed them?
- Are they still true and accurate today? (Do you have an errors or omissions to correct?)
- Do you have any corrections or changes to bring to my attention?
- Have your financial circumstances changed since the date of filing? (New job, etc)
- Did you have a chance to read the “Bankruptcy Information Sheet” handout from the United States Trustee? (Have you read everything Mr. Russell’s office has given you to read?)
- Do you owe or pay any spousal or child support?
- Have you ever filed bankruptcy before (or anytime in the last 8 years)?
- On the date of filing did anyone owe you any money?
- On the date of filing did you have any legal claims you might be able to raise against another such as personal injury claim resulting from a car accident?
- Other than this proceeding, have you met with or hired any other lawyer in the last 4 years?
- Were you garnished in the 90 days before this case was filed?
- Do you deposit money into anyone else’s account?
- Do you think it’s likely you could inherit some money or property in the near future? If anyone dies in the next six months, do you promise to let me and/or your attorney know because that would be part of this bankruptcy? (Yes, you do.)
- Have you ever been self-employed or run a business?
- Have you owed or made payment on a land or home in the last 10 years?
- In the last 4 years have you sold, transferred, given away or disposed or any real or personal property worth more than $1,000.00?
- Have you paid any money to any family member or friend in the last year?
- Have you paid more than $1,000 in total to any single creditor in the 90 days prior to filing?
- Do you have any virtual or online accounts such as Venmo or Paypal?
- Do you now or have you ever owned or used any cryptocurrency such as Bitcoin?
