Published: Oct. 28, 2009 at 4:41 PM

How Chapter 7 bankruptcy works.
Chapter 7 bankruptcy is sometimes called “straight” or “liquidation” bankruptcy — it cancels your debts, but you might have to let the bankruptcy court liquidate (sell) some of your property for the benefit of your creditors. (“Chapter 7″ refers to the chapter of the federal Bankruptcy Code that contains the bankruptcy law.)

Chapter 7 Bankruptcy Costs in Time and Money
The whole Chapter 7 bankruptcy process takes about four to six months, costs $299 in filing and administrative fees, and commonly requires only one trip to the courthouse.

You must also complete credit counseling with an agency approved by the United States Trustee. (For a list of approved agencies in each state, go to the Trustee’s website, www.usdoj.gov/ust, and click “Credit Counseling and Debtor Education.”)

Who Can File
You won’t be able to use Chapter 7 bankruptcy if you already received a bankruptcy discharge in the last six to eight years (depending which type of bankruptcy you filed) or if, based on your income, expenses, and debt burden, you could feasibly complete a Chapter 13 repayment plan. (For more information on these eligibility requirements, see Chapter 7 Bankruptcy — Who Can File?)

Bankruptcy Forms
To file for Chapter 7 bankruptcy, you fill out a petition and a number of other forms and file them with the bankruptcy court in your area. Basically, the forms ask you to describe:

your property
your current income and monthly living expenses
your debts
property you claim the law allows you to keep through the Chapter 7 bankruptcy process (called “exempt property”) — most states let you keep some equity in your home, clothing, household furnishings, Social Security payments you haven’t spent, and other necessities such as a car and the tools of your trade.
property you owned and money you spent during the previous two years, and
property you sold or gave away during the previous two years.
You’ll find step-by-step instructions for filling out all of the required forms in How to File for Chapter 7 Bankruptcy , by Stephen Elias, Albin Renauer, and Robin Leonard (Nolo).

Bankruptcy’s Magic Wand — The Automatic Stay
Filing for Chapter 7 bankruptcy puts into effect an “Order for Relief” — known informally as the “automatic stay.” The automatic stay immediately stops most creditors from trying to collect what you owe them. So, at least temporarily, creditors cannot legally grab (“garnish”) your wages, empty your bank account, go after your car, house, or other property, or cut off your utility service or welfare benefits. For more information, see How Bankruptcy Stops Your Creditors: The Automatic Stay.

Bankruptcy Court’s Control Over Your Financial Affairs
By filing for Chapter 7 bankruptcy, you are technically placing the property you own and the debts you owe in the hands of the bankruptcy court. You can’t sell or give away any of the property you own when you file, or pay off your pre-filing debts, without the court’s consent. However, with a few exceptions, you can do what you wish with property you acquire and income you earn after you file for bankruptcy.

The Bankruptcy Trustee for Chapter 7 Bankruptcy
The court exercises its control through a court-appointed person called a “bankruptcy trustee.” The trustee’s primary duty is to see that your creditors are paid as much as possible on what you owe them. And the more assets the trustee recovers for creditors, the more the trustee is paid.

The trustee (or the trustee’s staff) will examine your papers to make sure they are complete and to look for nonexempt property to sell for the benefit of creditors. The trustee will also look at your financial transactions during the previous year to see if any can be undone to free up assets to distribute to your creditors. In most Chapter 7 bankruptcy cases, the trustee finds nothing of value to sell.

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 bankruptcy trustee runs the meeting and, after swearing you in, may ask you questions about your bankruptcy and the papers you filed. 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. (For information on which types of property are typically exempt, see When Chapter 7 Bankruptcy Isn’t the Right Choice. However, which property is exempt varies by state — you can find complete lists of exempt property for every state in How to File for Chapter 7 Bankruptcy , by Stephen Elias, Albin Renauer, and Robin Leonard (Nolo).)

Most property owned by Chapter 7 debtors is either exempt or is essentially worthless for purposes of raising money for the creditors. As a result, few debtors end up having to surrender any property, unless it is collateral for a secured debt (see below).

How Your Secured Debts Are Treated
If you’ve pledged property as collateral for a loan, the loan is called a secured debt. The most common examples of collateral are houses and automobiles. If you’re behind on your payments, the creditor can ask to have the automatic stay lifted in order to repossess or foreclose on the property. However, if you are current on your payments, you can keep the property and keep making payments as before — unless you have enough equity in the property to justify its sale by the trustee.

If a creditor has recorded a lien against your property because of a debt you haven’t paid (for example, because the creditor obtained a court judgment against you), that debt is also secured. You may be able to wipe out the lien in Chapter 7 bankruptcy.

The Chapter 7 Bankruptcy Discharge
At the end of the bankruptcy process, all of your debts are wiped out (discharged) by the court, except:

debts that automatically survive bankruptcy, such as child support, most tax debts, and student loans, unless the court rules otherwise, and
debts that the court has declared nondischargeable because the creditor objected (for example, debts incurred by your fraud or malicious acts).

Source: http://www.nolo.com/legal-encyclopedia/article-29571.html;jsessionid=2763CB4B1959D121F5F242160AAB91E9.jvm1

Chapter 7, otherwise known as “liquidation” or “straight bankruptcy” is generally the simplest and quickest and is available to individuals, married couples, corporations and partnerships. A trustee appointed by the court gathers and sells your nonexempt property. The proceeds from the sale pay your creditors. You’re able to keep any “exempt” property.

Exempt Property
When determining what is considered exempt, many states allow you to use the state’s definition of exempt or the federal list of exempt property. Some states require to use the state’s list. Be sure to check your state’s laws to find out what applies to your state.

Exempt property could consist of the following (see the list and code for your state for details):

Real estate such as a residence
Trade or professional tools, books,
Unmatured life insurance contract
Prescription health aids
Social security, veteran’s benefit, disability, illness or unemployment benefit
Proceeds from a judgment
Beginning October 17, 2005, under the new Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), you now also have more time to decide whether to use the state of federal exempt property lists. This was to prevent someone from moving to a different state with more generous exemptions.

Most chapter 7 cases are “no-asset” cases, which means that you don’t have nonexempt property for the trustee to sell. When you file your petition for bankruptcy, you declare whether your case is “asset” or “no-asset.” The burden is on the trustee to change the designation.

Eligibility for Chapter 7
If you file, under BAPCPA, you must undergo a “means test” to qualify for Chapter 7 bankruptcy. This is how the IRS determines who can or can’t file. Your income and expenses are examined to see how they compare to the standard for your area as set by the IRS.

For example, if you earn less than the median income for a family of your size in your state, you can file for Chapter 7 bankruptcy. However, if your income from the last six months is greater than the median income, and you can pay at least $6,000 over five years or $100 a month, toward your debt you can’t file for Chapter 7. You must file for Chapter 13 instead.

The means testing requires you pay any overdue tax returns withing weeks of filing bankruptcy.

Now, you must also pay for credit counseling and budget analysis at your own expense. This will address the means testing caluculations for you. These calculators can also be found on the Internet.

Filing Chapter 7
Bankrupty starts with filing an official petition, schedules and Statement of Financial Affairs in bankruptcy court. You must provide:

A full list of creditors
The amount and type of their claim, the source, amount and frequency of your income
A list of all your property
A detailed list of monthly living expenses
As soon as you file for bankruptcy, creditors are prevented from trying to collect on your debts through an “automatic stay.” The stay preserves your property and gives you a break from being sued.

Creditors must show the bankruptcy judge there is cause to continue with collection action. For instance, by showing the property might deteriorate in value during the bankruptcy period.

If there is nonexempt property, the trustee will control of it. That person will sell the property and pay administration fees and then pay any remaining money to creditors with active and approved claim. These will be paid in a level of priority. Any wages earned after filing, you keep and are beyond the reach of creditors prior to the filing date.

341 Hearing
Twenty to 40 days after filing your petition, the trustee holds a “first meeting of creditors,” called a “341″ meeting. You must be present. You’ll be asked questions by the trustee under oath about your property and debts. Creditors can also question you, but seldom do.

The only responsibilty you have after the 341 meeting is cooperating with trust and providing any information.

Creditors have 60 days after the meeting to convice the bankruptcy court they should be paid and shouldn’t be “discharged.”

You can also be approached about “reaffirmation” of debts. This is an agreement between you and the creditor that you’ll pay the remaining portion of the debt to keep certain property, even if their debt is being discharged. This could prevent an automobile from being sold instead.

Under the old bankruptcy law, you could make car payments when they became due. When the loan was fully paid, title to the car would be transferred to you. If you defaulted on the loan after discharge, the creditor could repossess the car, but the repossession deficiency amount that you owed would still be wiped out and you would owe nothing.

Under the new law, you have to declare again your dedication to your car loan within 45 days after the “341 meeting.” You can no longer continue to make car payments without reaffirming the loan. If you default on your payments after the loan is reaffirmed and the car is repossessed, you are liable for the repossession deficiency.

There is also an option to purchase the car within 45 days of the “341 meeting.” This means that you have to pay the entire balance that is due within that time period. Because most debtors do not have that kind of money, this option is rarely used.

Reaffirming Debts
If you decide to reaffirm a debt, you must file an agreement with the court. The agreement has to disclose:

your income and expenses so that the court can see that there is sufficient money to pay the reaffirmed debt
that you were advised of the amount of the debt you are reaffirming
how the debt was calculated and;
that you are aware that the debt will not be discharged
Unless you are represented by an attorney, the court must approve the agreement. A hearing will be held if the court disapproves.

If an attorney represents you, he or she must certify in writing that they advised you of the legal consequences of the agreement, you were fully informed and entered into the agreement voluntarily, and that the reaffirmation will not create an undue hardship on you and your family.

Unsecured creditors (i.e. creditors that lend money without obtaining assets as collateral) may offer deals for new credit based on reaffirming the existing balance on your credit card.
The trustee may review your income and expenses to see if you have enough money left after your current living expenses to pay something to creditors.

Discharge
If creditors haven’t persisted in trying to get money from you and the trustee within 60 days of the 341 meeting, your debts that existed before the filing date will be “discharged” or canceled.

What debts are discharged
in Chapter 7?
Dischargeable Possibly Dischargeable Not Dischargeable
Personal loans
Credit cards
Repossession deficiencies
Auto accident claims
Judgments
Business debts
Leases
Guaranties
Negligence claims
Property settlements or division of debts in divorce
Willful and malicious injuries to others
Embezzlement
Debts incurred by fraud or dishonesty
Debts arising from breach of fiduciary duty

For debts not to be discharged, creditors must ask the court to decide what they want done with them. If a creditor doesn’t ask for a debt to be paid back, they will be canceled.
Recent taxes
Trust fund taxes
Child or family support
Criminal fine or restitution
Auto accident claims involving intoxication
Debts not scheduled
Penalties payable to the government other than tax penalties
Student loans
Debts listed in prior bankruptcy where debtor was denied a discharge
from Dischargeable Debts

It’s very important to note that Chapter 7 will not stop repossession or a foreclosure. Automatic stays don’t cover failure of making back payments. Only by filing Chapter 13 can you delay a foreclosure, but your obligations to repay would be extreme.

Take your time when deciding whether to file and which chapter to file. BAPCPA says that once your debts are dismissed, you’re unable to file again for two years so choose the right time and right way to file from the beginning. If you make the right decisions, it’s a quick, efficient way to get a fresh financial start.

Questions For Your Attorney
My Domestic Partner and I want to file for a Chapter 7 Bankruptcy. How do we do it?
Does any of my property qualify as exempt under Chapter 7?
How do I prepare for a “341″ meeting?

Source: http://bankruptcy.lawyers.com/Chapter-7-Bankruptcy-Basics.html

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October 14, 2009 12:00 AM

Dear Dr. Fournier:

I’ve never seen homework like what my 10-year-old son and daughter bring home. It’s not like anything I did called “homework” when I was in school in the mid ’70s. I had the twins late in my life when I was 40), so something must have changed between the time I was in school and today. It’s triple — sometimes quadruple — the amount I had to do.

They come to me telling me they don’t know how to do parts of their homework. I ask them to think about what they learned in class on the parts they say they can’t do and they tell me the teacher hasn’t taught it yet.

What has happened since I was in school?

Cathy R.
Tupelo, Miss.

Dear Cathy:

It is important for you and parents around the country to recognize the change in what homework asks children to do today as opposed to when you were in school.

You were in a generation whose homework assignments were mostly review or practice. This makes it difficult for you and the millions of other parents and grandparents around the country to understand why — after doing hours and hours of homework nightly — our children aren’t ready to continue in class the next day.

ASSESSMENT

In the generation after yours, Cathy, the function of homework changed dramatically. That change has become a major cause for the classroom failure we see today all over the country.

While the name “homework” remains the same, it has undergone several drastic changes since you did yours:

• The expectation that students, on their own, should be able to do the tasks assigned. This has one result: The child can’t complete the work, parents come to the rescue, and no one is saved in this disaster.
• The expectation that students should do perfect work. Responsible students already overwhelmed by homework itself are expected to turn in perfect work rather than use homework to identify what is left to be learned. This expectation of perfection seems to rise in direct proportion to the increased importance of homework grades on total grade.

These changes have intensified the parental fear that “if my child doesn’t know it all tomorrow, he or she will be the only one.” This is true only because parents all over the country are helping their children by using their adult knowledge to fill in the homework answers their children cannot do.

The focus on “doing” homework is best expressed in the traditional sayings, “Did you do your homework? Hurry up and get it done.” This was acceptable for a generation when doing homework was for the only thing it was intended for — review.

But now homework requires learning, not just review — learning math facts, learning a portion of the social studies chapter, learning how to write a book report, etc.

Just as homework has changed, so must the focus change from “doing” to “learning.” That “learning” is accomplished when children can demonstrate or explain that the knowledge is now theirs.

Rote “doing” is not enough.

WHAT TO DO

With this new focus on “learning,” parents can attack the false expectations of the “new” homework. To do so, parents and teachers must first recognize another expectation — the specific tasks expected of students.

It’s time to stop asking children, “Did you do your homework?” and start asking “Did you learn your homework?” so children can clearly understand that they are expected to learn and not just to do.

Tonight, Cathy, ask your twins, “Have you learned your homework?” and then ask them to show you. If they struggle with demonstrating or explaining what they learned, it will be easy to see where more teaching is needed — but by the teacher, not the parent.

Help your children formulate precise questions for the teacher to be addressed in class the next school day. And start today by changing your language from doing homework to learning homework.

Have a question about education, education-related issues or your child’s schoolwork or homework? Ask Dr. Fournier and look for her answer in this column. E-mail your question or comment to Dr. Yvonne Fournier at drfournier@hfhw.net.

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