Chapter Seven.
Overview of Chapter 7
 After reading this chapter, you will be able to:




Describe the basic events which occur in all
bankruptcy proceedings.
Understand the rules relating to professional
retention and compensation in bankruptcy
proceedings.
Define the concept of discharge
Define the concept of reaffirmation and the
procedures utilized to reaffirm a debt
Consumer No Asset
Chapter 7 Proceeding
 A consumer no asset Chapter 7 proceeding is
a proceeding filed by an individual debtor or
joint debtors in which there will normally be
no assets available for the trustee to
administer for distribution of dividends to
unsecured creditors.
 Any assets owned by the debtor will be either
secured or exempt.
Practice Pointer
 The Bankruptcy Code describes ‘‘joint
debtors’’ as an individual debtor ‘‘and such
individual’s spouse.’’ The Code recognizes
married couples but no other joint filings.
Employment and Compensation of
Professionals
 The Bankruptcy Code regulates the
employment and compensation of
professionals rendering services in any
bankruptcy proceeding.
Bankruptcy Petition Preparers
 Section 110(a) defines a bankruptcy petition preparer
as a person other than the debtor’s attorney or the
attorney’s employee under that attorney’s direct
supervision who prepares for compensation a
document for filing with the Bankruptcy Court.
 An unsupervised paralegal may be a bankruptcy
petition preparer.
 A document for filing is any document prepared for
filing by a debtor in a bankruptcy case.
Exempt
 Exemptions are statutorily defined property
that an individual debtor may protect from
administration by a bankruptcy estate.
 Exempt property is not available for
liquidation to pay a dividend to creditors; a
debtor may keep exempt property.
 Exemptions are a primary element of debtor
relief.
Discharge
 Discharge is legal relief from debt provided
for by Section 524 of the Bankruptcy Code.
 The discharge is one of the three elements of
debtor relief provided for in the Bankruptcy
Code.
Automatic Stay
 Automatic Stay is a statutory bar to the
conducting of any collection activity by
creditors after a bankruptcy petition has been
filed.
 The automatic stay is one of the three major
elements of debtor relief provided by the
Bankruptcy Code.
Fresh Start
 “Fresh Start” is the phrase most frequently
used colloquially to describe the basic
elements of debtor relief:



Discharge
Exemptions
Automatic Stay
Eight Basic Requirements for
Bankruptcy Petition Preparers
 The preparer must sign the document and include the
preparer’s name and address.
 Provide a notice to the debtor, prior to the preparation
of any document, stating that a petition preparer may
not give legal advice.
 The preparer shall include the preparer’s Social
Security number on the document.
 The preparer shall furnish the debtor with a copy of
the document not later than the time the document is
presented to the debtor for signature.
Slide 1 of 2
Eight Basic Requirements for
Bankruptcy Petition Preparers
 The preparer shall not execute any document on
behalf of a debtor.
 The preparer shall not use the word “legal” or any
other similar term in advertisements or advertise
under any “legal” category.
 The preparer may not receive or collect payment for
court fees.
 The preparer shall, within ten days after filing of a
petition, file a declaration under penalty of perjury
disclosing any fees paid or promised by or on behalf
of the debtor.
Slide 2 of 2
Reaffirmation
 Reaffirmation is a debtor’s agreement to
remain legally liable for repayment of a debt
otherwise dischargeable in a bankruptcy
proceeding.
 For a debt to be legally reaffirmed, strict
compliance with the provisions of Bankruptcy
Code Section 524 is required.