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Bankruptcy

Q: What is involved in filing Chapter 7 bankruptcy? A: First of all, Chapter 7 is referred to as liquidation. That is if the debtor has any non-exempt property (money, real estate, art, jewelry, collectibles, etc.), the bankruptcy trustee can take it, sell it, and pay off your creditors a pro rata share of what you owe them. Wherefore, we generally do not recommend Chapter 7 unless the debtor has no non-exempt assets. Most people in the North Country who truly cannot afford to pay their debts do not have any non-exempt assets. (We will talk more about exemptions in future Law Talks). So, with that in mind, we first ask people interested in bankruptcy to file out a questionnaire that we use to complete the Chapter 7 Petition. The filing of the Petition with the Court starts the bankruptcy case. It triggers the automatic stay (of all collection efforts) against creditors. Our questionnaire asks for all of the debtors assets. An asset is anything that a person or family owns. This includes: money in the bank, furniture, clothing, cars, recreation vehicles, jewelry, retirement accounts, houses, and real estate. We need to know the income of the debtor (and spouse) over the past 2 years. We also need to know current living expenses. Finally, the debtor has to list all debts, secured and unsecured. If a debt is excluded from the Petition, it is not discharged. Before we can prepare the Petition, we ask for payment of our $701 legal fee and the $299 court filing fee. The debtor has to take a debtor counseling course (available on-line or over the phone). After the debtor takes the course, pays us, and turns in the questionnaire, it can take as short as a week to prepare the Petition and file it (if the debtor has all of the necessary documents). About a month after filing the Petition, there is a meeting of creditors, conducted by the bankruptcy trustee in Plattsburgh at the old federal building (next to the Strand Theater on Brinkerhoff Street). The debtor must attend that meeting. Mark or Dan attend the meeting to represent our client. The trustee asks questions to make sure that all assets, income, debts, and expenses are correct. He wants to find out if there are any non-exempt assets that he can seize and sell for the non-secured creditors. If there are no problems, the Court discharges the debtors debts about two months after that.

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