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This page contains general information about Chapter 7 of the U.S. Bankruptcy Code.
While this information is accurate as of the date of publication, it should not be cited or relied upon as legal
authority. This information should supplement, not substitute for advice of competent legal counsel.
Basic Information
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Summary
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Chapter 7 bankruptcy is designed to provide a fresh start for individuals whose assets and/or income is insufficient to pay their debts. Chapter 7 bankruptcy is commonly
referred to as straight bankruptcy or liquidation. In a Chapter 7 case, the debtor is permitted to exempt (or keep) certain property. The remaining non-exempt property is
liquidated, or sold, by an impartial trustee and the proceeds are paid to creditors. In exchange for the debtors assets, the debtor is discharged from most debts.
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Filing
Chapter 7
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A Chapter 7 case begins with the filing of a petition. Generally, the petition is filed with the bankruptcy court for the area where the debtor lives. Only a husband and wife
may file a joint petition. The filing fee for Chapter 7 is $209.00. The fee is due at the time of filing and must be paid by cash, money order, or with an attorneys or
certified check. With the courts permission, the fee may be paid in installments.
Along with the petition, the debtor must file a list (matrix) containing the names and addresses of all creditors. The debtor must also file a bankruptcy statement of financial
affairs and bankruptcy schedules, including, a list of assets, liabilities, income, expenses, and property claimed exempt. Official Bankruptcy Forms can be purchased at an
office supply store or may be downloaded from the Courts Internet site, www.moeb.uscourts.gov . Forms are NOT available at the Court. Failure to timely file these documents may result in dismissal of the case.
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Automatic
Stay
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The filing of a bankruptcy petition operates as an automatic stay. The automatic stay prohibits action against the debtor and the debtors property. As long as the stay is in
effect, creditors generally may not continue any lawsuits, garnishments, foreclosures, or demands for payment. The court sends notice to creditors listed on the matrix
advising them of the filing of the bankruptcy case, the automatic stay, the meeting of creditors, and other important deadlines.
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Meeting of Creditors
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The United States Trustee appoints an impartial trustee to administer the case. The trustee holds a meeting of creditors within 20 to 40 days of filing the petition in the
Eastern Division (St. Louis) and within 20 to 60 days for the outlying divisions. The debtor (both husband and wife in a joint case) must attend but may be accompanied by an
attorney. The purpose of the meeting is to allow the trustee and creditors to ask questions regarding the debtors financial affairs. The debtor must answer questions under
oath and must provide the trustee with tax returns, pay stubs, and other financial records. Failure to attend the meeting of creditors may result in dismissal of the
bankruptcy case.
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Property of the Estate & Exemptions
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All property in which the debtor has any interest on the date of filing becomes property of the bankruptcy estate. The estate includes the debtors real and personal property as
well as less obvious interests, such as the debtors right to a tax refund, certain inheritances and lawsuit proceeds. Most Chapter 7 cases are no asset cases, meaning the
debtor has no property with a market value above the amount of any liens plus the amount claimed exempt. State and federal law permit the debtor to exempt (or keep) certain
property from payment to creditors. If the debtor has equity in his property that cannot be exempted, or if the debtor does not claim allowed exemptions, the case will be an
asset case. In asset cases, the trustee takes possession of the assets and sells them to pay creditors. Creditors will be notified to file proofs of claim in asset cases.
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Discharge
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Unless a complaint is filed objecting to discharge, the debtor generally will receive a discharge within 60 to 90 days after the meeting of creditors. The discharge
extinguishes the debtors obligation to pay most debts and prohibits collection of those debts after bankruptcy. Certain obligations, however, including most taxes, student
loans, child support and alimony are not dischargeable. Others debts, such as debts for fraud, intentional injuries, and other divorce related obligations can be
non-dischargeable if determined by the court.
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Reaffirmation
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Although the discharge prohibits creditors from taking action against the debtor personally, most liens remain intact after bankruptcy, and unless the debtor and creditor
agree, the creditor may foreclose or repossess its collateral after the case closes. To retain collateral, the debtor must either reach an agreement with the creditor for
payment or take action to avoid the creditor's lien. One such agreement is an agreement to repay, called a reaffirmation agreement. A reaffirmation agreement is enforceable
only if it is voluntary, made before the discharge is entered, and filed with the court. If an attorney is not involved, in most cases, the court must hold a hearing to
approve the reaffirmation agreement. Failure to pay a reaffirmed debt can result in the creditor collecting directly from the debtor as if the debtor had not filed bankruptcy.
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Closing
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Generally, in a no-asset case, the court will close the case shortly after discharge. Asset cases are closed after full administration. The debtor should keep a copy of the
discharge order with his or her other important personal records.
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Filing Requirements
The forgoing is very basic information. A Chapter 7 case can involve many other issues. The Bankruptcy Court,
Chapter 7 Trustee and the United States Trustee cannot give legal advice. Use of competent legal counsel is recommended.
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On the Date of Filing:
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- Fee $209.00 (cash, money order, certified or attorney's check)
- Voluntary Petition
- Creditor Matrix
- Verification of Creditor matrix
- B21 Form
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On or within 5 days of the Petition Date:
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- Attorney Compensation Disclosure Statement (if case is filed by an attorney)
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On or within 15 days of the Petition Date:
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- Summary of Schedules
- Schedules A - J
- Signed Declaration concerning Schedules
- Statement of Financial Affairs w/signed Declaration
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Within 30 days of the Petition Date or Before the Meeting of Creditors:
(whichever occurs first)
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- Chapter 7 Debtors Statement of Intention
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If you wish to receive a file stamped copy of any document you file, please provide an additional copy and self-addressed, stamped return envelope at the time of filing.
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Instructions for Preparing Creditor Matrix
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The list of creditors (matrix) must comply with the following guidelines to be utilized by the Court's scanner.
1. Lists must be typed using standard typeface (Courier) in 10 point font, justified left and typed in a single column. The list should appear on only one side of the page.
2. There must be at least a one inch margin from the left and right edges of the paper and a one inch margin from the top and bottom.
3. Each name/address must consist of no more than five lines, typed single space, with at least one blank line between each entry.
4. Each line may contain no more than 40 characters.
5. Do not put account numbers or other notations in the address entry.
6. Do not use all capital letters.
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Sample Matrix:
Household Finance
P. O. Box 1000
Anytown, MO 66809
Jane Doe
10345 Main St.
St. Louis, MO 63101
Mercy Hospital
1234 Center Ave.
Yourtown, MO 64102
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