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The process of filing for Chapter 7 bankruptcy

On Behalf of | Nov 30, 2020 | Bankruptcy |

Filing for Chapter 7 bankruptcy may be an ideal way to eliminate business or personal debts. In a Chapter 7 proceeding, nonexempt assets are liquidated to pay your unsecured creditors. Any outstanding balances that remain after your property is sold will likely be discharged. Take a closer look at the process of filing for Chapter 7 bankruptcy in New Mexico.

Take a credit counseling course

You must take an approved credit counseling course no more than 180 days prior to filing for bankruptcy. This course will provide insight into the consequences of making such a decision as well as present other strategies that might be available for paying off your debts. Typically, you’ll be required to take another financial education course after your case is heard but before it is discharged.

File bankruptcy documents

The court will need to see a complete list of your assets, debts and other liabilities to determine if you are eligible for Chapter 7 bankruptcy. In most cases, the trustee and your creditors will review these documents to ensure that they are accurate. If you choose to hire an attorney to help with the case, he or she can help you gather documents and ensure that paperwork has been filled out properly.

Nonexempt assets are sold, and the case is discharged

After reviewing the information that you submitted to the court, the trustee will begin the process of selling your nonexempt assets. If you don’t have nonexempt property, your case will be labeled as a “no asset” bankruptcy. In most cases, discharge occurs soon after property has been liquidated. You should expect your case to be discharged between 90 and 180 days after filing the original petition.

Filing for Chapter 7 bankruptcy may have a profound impact on your credit score and overall financial situation for months or years after your case is discharged. However, doing so may allow you to obtain an automatic stay against creditor collection activities. Your attorney may be able to provide more information about the process of seeking protection from unsecured creditors.