Read these 3 Chapter 7 Bankruptcy Tips tips to make your life smarter, better, faster and wiser. Each tip is approved by our Editors and created by expert writers so great we call them Gurus. LifeTips is the place to go when you need to know about Bankruptcy tips and hundreds of other topics.
After you file Chapter 7 forms with the court, you will enjoy protection under the federal bankruptcy code. However, your debts are not erased through this filing. The court still must approve your request for permanent protection under the law, supervise the liquidation of your assets, and validate the payments to creditors. Usually, the court will rule on your petition in about three to five months, depending on the complexity of your case and the work load of the court. When the court rules that you are “discharged,” all debts noted in your original filing are erased permanently.
A Chapter 7 trustee is someone who is appointed by the court or, sometimes, agreed upon by the creditors who are involved in a bankruptcy case. The trustee must be licensed as an “insolvency practitioner” and must be registered under the United States Bankruptcy Act. During a Chapter 7 bankruptcy, the trustee receives all of the debtor's non-exempt property (assets), generates and manages the funds from the sale of those assets, pays related expenses, and, then disburses the remaining funds to the listed creditors. The Chapter 7 trustee acts as an officer of the court to ensure that both the debtor's and the creditors' interests are protected and administered in accordance with federal bankruptcy laws.
Exemptions are provisions in both the federal bankruptcy laws and, often, state regulations that allow you to protect a variety of assets from being included in a Chapter 7 bankruptcy filing. For instance, federal bankruptcy laws allow you to exempt home equity (up to $125,000), employee contributions to ERISA qualified retirement plans, deferred compensation plans, tax-deferred annuities, and health insurance plans. Pennsylvania bankruptcy lawyers would advise you that, in addition, accident or disability benefits, group life policies or proceeds thereof, unemployment compensation, veterans' benefits, and workers' compensation are exempted if you so choose. Should you live in Wisconsin, your Milwaukee bankruptcy lawyers will inform you you're your Homestead, up to $40,000 in equity, consumer goods and household furnishings up to $5,000 each, are also exempted from the liquidation requirements if you elect to use these features. Check your local regulations to learn about the exemptions to which you may be entitled.