How to Pay Off Accounts Included in Chapter 7 Bankruptcy
Chapter 7 bankruptcy is a form of personal bankruptcy available to consumers with limited assets and income. A Chapter 7 bankruptcy is often referred to as a "liquidation" bankruptcy due to the fact that, rather than repay your debts over time like you would in a Chapter 13 bankruptcy, you will need to turn your non-exempt assets over to the court to be used as payment. The court will sell your assets and seize your bank accounts to pay off as much of your outstanding debt as possible. Any debts that cannot be paid using your available assets will be discharged by the bankruptcy court.
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Instructions
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List all of your debts and assets on your bankruptcy paperwork when you file. This allows the court to determine how much money is available to cover your debts and allocate it accordingly. You will also need to provide the court with documentation of your monthly expenditures and records of any property you own.
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Attend the meeting of creditors. During the meeting of creditors your creditors and the bankruptcy trustee may question you about your financial situation. You must attend and answer all questions to the best of your ability. If you fail to appear, your case may be dismissed and your debt will not be paid.
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Adhere to the Chapter 7 guidelines by allowing the bankruptcy trustee to seize your non-exempt assets and use those assets to pay your creditors. The trustee may seize your home, vehicle or investments. Creditors are classified by tier and there are six tiers. Debts on the lower tiers, such as credit card debts, are paid after debts on higher tiers.
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Keep copies of the bankruptcy paperwork that lists the debts that were included in the bankruptcy. You will need this if a collection agency contacts you in the future about a debt that was included in your Chapter 7 bankruptcy filing.
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Pay any additional debts you feel the need to after the bankruptcy is discharged. In many cases, a debtor's assets are not enough to pay off his debts in a Chapter 7 bankruptcy. If this occurs, you have the option to pay off any debt you please after the bankruptcy has been discharged--even if you are no longer legally obligated to do so.
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Tips & Warnings
You can legally file for bankruptcy without the aid of an attorney, but an attorney can help you find exemptions and make the bankruptcy process less stressful.
Debts such as child support obligations and alimony cannot be discharged via bankruptcy.
