Additionally, the trustee determines whether or not there have been unlawful transfers of property or funds and whether or not the transferred items can be recovered and sold to pay off creditors. Moreover, he or she can invalidate the case if evidence of fraud or perjury is discovered during the proceedings.
In Chapter 13 bankruptcy proceedings, the trustee evaluates the individual's proposed repayment plan and collects and distributes payments.
The ability of an individual to petition for Chapter 7 bankruptcy is determined by a means test established during 2005 code revisions.
Typically, Chapter 7 bankruptcies have no assets, so creditors receive no payment. Chapter 7 bankruptcy is typically the simplest and quickest option for individuals, couples, partnerships, and corporations.
If the means tests are passed and approval for Chapter 7 bankruptcy is granted, the process begins with the completion of forms detailing one's financial affairs and financial history. This is the most important and time-consuming step in the Chapter 7 procedure. Each and every debtor must be listed on the forms.
The forms must also identify assets, including property, any debts secured by the property, and the property's market value. Also, keep in mind that ""property"" encompasses more than just land. Any possession, such as works of art or valuable collections, must also be listed as property.
The individual signatures the forms detailing all debts and assets with the knowledge that falsifying the document intentionally constitutes perjury. The forms are then lodged with the bankruptcy clerk in the individual's respective federal court district.
After the case is filed, everything regarding the individual's financial situation is based on the date of filing, not prospective income or financial concerns. A stay is then issued, preventing creditors from conducting any liquidation auctions in an effort to recover funds.
The court will then appoint a trustee who will notify all creditors of the bankruptcy filing. A first meeting of creditors is convened, at which the debtor must attend and answer questions under oath about his or her financial situation from the trustee. During this meeting, creditors also have the opportunity to ask questions.
Following the meeting with creditors, the trustee assumes control of all non-exempt assets and initiates the sale process. The trustee pays the administrative costs of the chapter 7 bankruptcy case with the proceeds of the sale and then distributes the remaining funds to creditors in accordance with the U.S. Bankruptcy Code.
Creditors and the fiduciary have sixty days from the date of the initial meeting to contest the individual's plan. The individual's debt is discharged shortly after the 60-day period expires, unless a challenge is lodged.""
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