Personal Bankruptcy Filing with Lawyer

Chapter 7, known as liquidation bankruptcy, generally allows for the quickest path to discharge by selling off any non-exempt property to pay creditors. Chapter 13, referred to as reorganization bankruptcy, permits individuals with regular income to keep their property while repaying all or a portion of their debts over three to five years. The choice between these two chapters hinges on the debtor's income, amount of debt, and the nature of their assets.

A discharge is the central objective of most bankruptcy filings; it is a court order meaning the debtor is no longer legally obligated to pay certain debts. This outcome is not automatically granted; it must be approved by the court after carefully evaluating the debtor’s good faith, the accuracy and completeness of all disclosures, and their eligibility under the law. Once debts are discharged, they are permanently eliminated, and creditors are legally prohibited from pursuing any further collection efforts.

The qualification process is determined by several factors, designed to assess genuine financial hardship and prevent abuse of the system. Even unemployed or low-income individuals may qualify, as there is generally No income requirement for filing itself. Additionally, unlike Chapter 13, there is No debt limit on the amount of unsecured or secured debt for a Chapter 7 filing.

• Means Test: For Chapter 7 filings, your average monthly income over the past six months must fall below the median income for your household size in the District of Columbia, or you must pass a more detailed "means test" that accounts for allowed expenses. This test determines if you truly lack the disposable income to repay your general unsecured debts.
• Credit Counseling: A mandatory element for virtually all individual filers is the completion of an approved credit counseling course within 180 days immediately prior to submitting the bankruptcy petition.
• Good Faith: The court requires the debtor to demonstrate financial hardship that was not caused by recent fraudulent behavior or bad-faith financial activity.

A crucial part of filing involves identifying and protecting property using legally defined "exemptions," which allow a debtor to keep certain assets. Since D.C. has not "opted out" of the federal exemption scheme, filers in Washington D.C. have the option to choose between either the District of Columbia's own set of exemptions (D.C. Code $15-501) or the federal bankruptcy exemptions (11 U.S.C. $522(d)). Choosing the right set of exemptions is critical to maximizing the retention of assets like home equity, vehicles, and personal belongings.

The bankruptcy process is officially initiated by submitting the petition and a voluminous collection of accompanying documents to the court. These filings must include detailed schedules of your assets and liabilities, a statement of your income and expenditures, and a comprehensive statement of your financial affairs. Accuracy is absolutely crucial at this stage, as incomplete or knowingly false filings can result in the immediate dismissal of the case or, worse, denial of discharge.

Following the initial filing, a court-appointed trustee is assigned to your case to oversee your financial affairs. This trustee will thoroughly examine your finances, verify the truthfulness and accuracy of the information provided in the petition, and determine whether any non-exempt assets exist that must be liquidated for the benefit of creditors. This review culminates in the mandatory Meeting of Creditors, also known as the “341 meeting,” where the debtor must attend and be questioned under oath by the trustee and any creditors who choose to appear.

The U.S. Bankruptcy Code (specifically 11 U.S.C. $727) outlines several grounds for denial of discharge, and these rules are strictly applied by the District of Columbia Bankruptcy Court. The following list summarizes behaviors that can lead to the court disqualifying a debtor from receiving a discharge:

• Property Concealment: Hiding assets from the trustee or court, or secretly transferring property to family or friends just before filing.
• False Statements: Knowingly submitting false or misleading financial information, testimony, or schedules to the court or trustee.
• Excessive Spending: Rapidly accumulating significant debt through activities like gambling, luxury spending, or large cash advances just before filing.
• Preferential Transfers: Intentionally repaying specific creditors (like family members or friends) significant amounts shortly before filing, giving them an unfair advantage over other creditors.
• Document Fabrication: Forging documents, destroying, or intentionally withholding financial records.
• Recent Bankruptcy History: Filing for Chapter 7 again within disallowed timeframes (typically eight years since a previous Chapter 7 discharge).