A Chapter 7 Bankruptcy is a legal action making your possessions (called assets) available to creditors (to whom you owe money) in exchange for eliminating your debts. The action takes place in federal court and is started by filing a petition by you (the debtor) listing all of the things you own and ALL of the debts you owe.
When your petition is filed, the court notifies all creditors within 20 days. Once notified, creditors cannot legally continue collection, foreclosure, repossession, garnishments or lawsuits against you. You are required to attend a court hearing called the first meeting of creditors. This hearing is held about five weeks after you file.
At the court hearing, a trustee, who represents all of the creditors, may question you regarding your financial affairs. The trustee may be a lawyer. No judge will be present. There is no certain amount that a person must owe to file bankruptcy. The trustee’s job is to ensure that you don’t have extra money or property that may be sold or given to creditors. You are usually able to protect most property.
The final discharge in bankruptcy is usually entered between one and three months following the court hearing. Discharge means that you are no longer required to pay the bills you owe. You may, at your option, pay some bills and property.