Filing for Chapter 7 Bankruptcy

Attorney Image By: James Filippi

Before we get started with filing, let’s touch upon Chapter 7 Bankruptcy. What is it? In simple words, a chapter 7 bankruptcy case doesn’t include the repayment plan which is seen in a chapter 13. Instead of that, It will discharge all of the debtor’s debts after the bankruptcy trustee collects and sells the non-exempt assets of the debtor and uses the proceeds to pay off claim holders.

However, the Bankruptcy Code allows the debtor to retain some property under several exemptions. Therefore, if you are considering a chapter 7 bankruptcy, you should be aware that it may result in the loss of property if it doesn’t fall within one of those exceptions.

Filing for Chapter 7 Bankruptcy

Now if you are willing to file for Chapter 7 Bankruptcy, then here is a list of things that you will have to do.

Debt Analysis

While a chapter 7 will eliminate the debts of a debtor, there are some debts which cannot be wiped out. These include student loans, child support obligations, and certain tax debts.

Property Exemptions

There are a specific set of exemption laws in every state which dictates the type of property you can keep after filing for Chapter 7 bankruptcy. In most cases, you can keep your household items, retirement accounts, and a car of reasonable value. There are other exemptions based on where you file your chapter 7 bankruptcy, so you should consult with a bankruptcy attorney so a complete analysis can be made to ensure those assets that can be exempted are protected from the liquidation.

Eligibility

Not everyone can qualify to file for a chapter 7 bankruptcy. First, you must pass the means test in accordance with Chapter 7 bankruptcy. The first step of the means test involves an analysis of the debtor’s income for the six months prior to the filing. If it doesn’t exceed the median income of a family of your size in your particular location, then you qualify. The median income levels are different for every state and are defined by the bankruptcy code. Second, if the income does exceed the median income for your location, it will require an in-depth analysis of your income and liabilities to determine if you qualify for a chapter 7 bankruptcy.

Bankruptcy Forms

There will be several dozen pages or more that will inform the court about the aspects of your financial condition which has resulted in your filing a chapter 7 bankruptcy. The forms include information about your property, gross income, expenditure, and previous transactions. These forms can be very technical and will be the basis of your request for a discharge. For that reason, it is wise to not do it on your own as you may unknowingly make a mistake that may prevent the discharge order by the bankruptcy court.

Credit Counseling Course

If you are filing for Chapter 7 bankruptcy, the bankruptcy code requires that you finish this course either before you file or shortly afterward. The course can be completed online and is offered by several different providers authorized by the bankruptcy court.

Filing Forms

Once you file your petition, your chapter 7 bankruptcy case will officially begin. The filing is often done electronically by digitally sending the petition to the bankruptcy court. It is typical for a debtor to submit all the forms at once, however, if you are short on time, you can opt for an emergency filing option that requires you to filing only particular documents now while finishing the remainder of the petition later.

Submitting Documents

Claim holders may oppose your bankruptcy petition which will result in an extended hearing with the trustee. This may require you to prove credibility of the information you provide in the forms. For this reason, you should be prepared to submit relevant documents to the bankruptcy trustee upon request. However, before submitting anything to anyone, you should have a licensed chapter 7 bankruptcy attorney review the documents to ensure you provide only the proper documentation.

Wind Up Secured Debts

While you are filling out the bankruptcy forms, you will have to indicate how you will manage the secured debts. Before your case closes, you will have to make a determination prior to wind up. There are many repercussions in making this decision, which is why it is wise to consult with a bankruptcy attorney to understand the effect of these decisions and to protect your property rights.

Debtor Education Course

After finishing your paperwork, there is a second course that you will have to complete. It is called the debtor education course. The course must be completed before you receive the discharge. In case you fail to submit your certificate, the court holds the right to close your case without a discharge. It is imperative that the course is completed as soon as possible to avoid any delays or dismissals.

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