Experienced Chapter 7 Bankruptcy Lawyer in Colorado

Chapter 7 bankruptcy was formerly called the default choice because it was available to nearly every business or individual in financial distress. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 reduces the availability of Chapter 7 to individual Colorado consumer debtors through a means test.

At the Law Office of Jon B. Clarke, P.C, we have an extensive background explaining the means test — involving a complex income and expense analysis for single individuals with annual income exceeding $48,598 and four-person family debtors with annual income exceeding $83,976 (these amounts effective for cases filed on and after 3/15/2011). Contact our law firm today to discuss your particular situation and determine if Chapter 7 is right for you.

The other chapters of relief under the Bankruptcy Code also contain eligibility restrictions. For example, Chapter 13 is unavailable to corporations, LLCs, and individuals whose secured and/or unsecured debt exceeds certain amounts. Chapter 11 is unavailable to business entities or individuals without adequate working capital, currently profitable operations, high personal income and liquid five-figure initial attorney retainer funding capability.

Asset Liquidation

The purpose of Chapter 7 is to liquidate the debtor's nonexempt assets for the benefit of creditors. When a Chapter 7 case is filed, a trustee is appointed to administer a bankruptcy estate to be created out of the debtor's nonexempt assets. From assets liquidated by the trustee, the estate pays the trustee's compensation and expenses "off the top" and distributes the remaining proceeds according to priorities set forth in the Bankruptcy Code. For trade creditors and ordinary consumer creditors, this generally means pro-rata payment of pennies on the dollar.

Meeting of Creditors

A few days after a Chapter 7 case is filed, the court clerk mails a notice to affected creditors setting a meeting with creditors in 25-40 days. The debtor appears at the meeting and answers questions posed by the trustee and occasionally by creditors who elect to attend. The creditors and the U.S. Trustee have between 10 and 60 days after the meeting to object to:

• Discharge of individual debts,
• Debtor receiving a discharge in general, or
• Debtor's presumptive or alleged abuse of bankruptcy law because — based on the means test — a five-year Chapter 13 monthly repayment case was not filed instead of the Chapter 7 case.

In the vast majority of Chapter 7 cases, the trustee files a no asset report, the 60 days pass, no objections are filed, and the debtor shortly thereafter receives a discharge. In about five percent of Chapter 7 cases, known as asset cases, the trustee decides to administer assets by creating a bankruptcy estate and making a distribution to creditors.

Generally consumer debtors redeem (keep) their nonexempt property by paying the trustee the agreed value of their unprotected asset(s). The redemption payment can be lump-sum out of exempt property or over a period of months out of post-filing wage income. Whatever property isn't redeemed is sold by the trustee at an auction. The debtor is paid the amount of any applicable exemption, and the remainder is deposited into the bankruptcy estate for future payment of trustee compensation and distribution to creditors.

Contact Us Today

Attorney Clarke has extensive experience representing clients in Chapter 7 bankruptcy. Contact his law firm today and discover how he can help you.

For more background information, reference our law firm's web resources. BankruptcyAction.com and Findlaw.com also provide invaluable details about filing for bankruptcy. To help us get started, please fill out and e-mail to us our law firm's online BCD form.