A Chapter 7 bankruptcy denies creditors their rights. From the moment a debtor files a case, the bankruptcy code prohibits recovery of collateral, phone calls, and mail to debtors about contractual terms.
Chapter 7 bankruptcies generally last 90 days. There is no payment plan or confirmation hearing. The debtor goes online to get the certification that he qualifies for bankruptcy. To qualify, the debtor has to provide proof of income and other financial information. In Chapter 7, the debtor must prove to the court that they have no disposable income to pay their debt. In a Chapter 7 bankruptcy, a debtor cannot make a creditor submit. The debtor may ask a creditor to reaffirm a debt and the creditor can say yes or no. Even if the house, car, or lease payments are current, a creditor may insist on the return of the collateral.
In a Chapter 7 bankruptcy scenario, a creditor can be passive or aggressive to recover collateral. To get the court’s permission to recover the collateral as soon as possible, a motion is filed to lift the stay. Afterwards, the hearing will be roughly a month later.
The Chapter 7 Bankruptcy Process
In a Chapter 7 bankruptcy, we have an absolute right to recover the collateral the first time we ask for it. Once a debtor files the bankruptcy, the meeting of creditors occurs about 30 days later. Then, after 30 more days, the protection of the case expires and the collateral can be recovered without the court’s permission. In another 30 days, the court enters the Order of Discharge. This order bankrupts the debtor from the debt. A creditor makes a business decision to be aggressive depending on the value of the collateral and the lack of insurance coverage.
Knighten Law Firm understands first-hand the complexities and nuances of the Chapter 7 bankruptcy process. If you are a creditor looking for relief, contact us today for help.
