An Overview of Chapter 7 Bankruptcy - Straight Bankruptcy
The Creditors Meeting
A week or two after you file, you (and all the creditors you list in your bankruptcy papers) will receive a notice that a "creditors meeting" has been scheduled. The trustee runs the meeting and, after swearing you in, may ask you questions about your bankruptcy and the papers you filed. The trustee will ask you whether the information in your papers is 100% true. Creditors rarely attend this meeting, but if they do, they may question you under oath about where collateral is located or about information you gave them to obtain the loan.
This meeting, which takes place somewhere in the courthouse, rarely lasts more than a minute or two. In the vast majority of Chapter 7 bankruptcies, this is the debtor's only visit to the courthouse.
What Happens to Your Property
If, after the creditors meeting, the trustee determines that you have some nonexempt property, you may be required to either surrender that property or provide the trustee with its equivalent value in cash. If the property isn't worth very much or would be cumbersome for the trustee to sell, the trustee may "abandon" the property -- which means that you get to keep it, even though it is nonexempt.
| What Is Exempt Property? | Each state has laws that determine which items of property are exempt in bankruptcy, and in what amounts. These items cannot be seized by creditors or by the bankruptcy trustee. Many states exempt health aids, "personal effects" (things such as electric shavers, hair dryers, and toothbrushes), ordinary household furniture and clothing without regard to their value. Other kinds of property are exempt up to a limit. For example, in many states, furniture or a car is exempt to several thousands of dollars. This exemption limit means that any equity in the property above the limit isn't exempt. (Equity is the market value minus how much you still owe.) Typically, the following items are exempt: - part of the equity in motor vehicles (the amount varies from state to state)
- reasonably necessary clothing (no fur coats)
- reasonably necessary household goods and furnishings
- household appliances
- jewelry, to a few hundred dollars
- personal effects
- life insurance (cash or loan value or proceeds), (the amount varies from state to state)
- part of the equity in a residence (the amount varies from state to state)
- pensions
- public benefits
- tools of a trade or profession, to a certain value, and
- unpaid but earned wages.
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