Bankruptcy – Chapter 7 Discharge
1. What is the purpose of Chapter 7 Bankruptcy Discharge?
The Chapter addresses the proceedings in a Bankruptcy Discharge. It is rather simple though. First, you need to file an application for bankruptcy, which may be voluntary or involuntary as mentioned before, to the court. The court, upon receiving the application, shall appoint a Liquidator (or a Trustee of Assets as other called in the U.S.).
This Liquidator then shall perform actions to sell off all the non-exempt assets of the applicant but retains the assets which are essential to the survival of the insolvent person. This proceeding shall only be commenced when the Schedules and Statement of Financial Affairs are officially made and duly signed by all related parties.
After such documents are signed, there will be a meeting among creditors in which, all the trustees and creditors may raise questions that the debtor is subject to answer under oath. This is called The 341 Meeting. Within 60 days upon the 341 Meeting, the creditors or trustees may raise objection to the debtor’s right to discharge under Chapter 7. In case of no such objection is raised, the discharge proceedings shall continue.
2. Chapter 7 Bankruptcy Discharge of Debts: Post-Effect
After the proceedings of Chapter 7 Bankruptcy Discharge has been obtained from the Legal Court, all dischargeable debts shall be made void and the creditors cancel all of their legal rights and documents against the debtor. However, there is a common concern among those Bankruptcy applicants that whether the family of the debtor shall be affected by the proceedings? Frankly, the answer is Yes; however, it depends much on the actual circumstances.
In case of a member’s discharge of assets, the credit and public records of the other family members shall be hold harmless. Even the neighbors or relatives of the debtor shall not necessarily be informed of the bankruptcy as well. However, credit and public records of the debtor and reporting agencies shall contain notes about Chapter 7 Bankruptcy Discharge and this may have adverse effect on the debtor when he or she goes working or does business in the future. Nevertheless, this blemish shall be deleted after 10 years.