Chapter 7 bankruptcy proceeding involves the elimination of unwanted debt. Very often, our clients will be able to retain their home and vehicles by continuing to make payments to the lien holders. In a Chapter 7 proceeding, property that is not encumbered or have a lien may be retained having up to $17,600.00 in equity for a single filer and up to $35,200 in equity for a joint filing in the residential real estate to be protected, that is, un-attachable by creditors. Also in a Chapter 7 proceeding, the State of Indiana’s exemptions allow a married couple to retain up to $18,700.00 in property not comprising the residential real estate and $9,350.00 in exemptions for an individual.
A Chapter 7 proceeding allows all pre-tax dollars placed in retirement accounts to be exempt, that is, un-attachable by creditors. Likewise, in most instances, there are provisions for the protection of life insurance policies even if they have a loan value or a cash surrender value. Creditors have a period of ninety (90) days in order to file any objection to the granting of a discharge for all debts or for their particular debt. This means that a Chapter 7 proceeding is open for ninety (90) days. Upon the expiration of the ninety (90) days, the Court may grant a discharge of debts provided that there are no objections filed. Generally, the most common form of objection arises when credit cards are used within ninety (90) days prior to the filing of the bankruptcy.
Generally, reaffirmation agreements are entered into with a mortgage holder or the lien holders on vehicles. However, if payments are current, oftentimes the mortgage holder or the lien holder on a vehicle will not require a reaffirmation agreement to be filed with the Court. A reaffirmation agreement takes the debt out of the realm of bankruptcy and makes the debt legally enforceable against the debtors (our clients). There are exceptions to discharge; however, generally speaking the granting of a discharge renders the scheduled debts unenforceable against the debtors (our clients