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How Do I File For Chapter 7 Bankruptcy?

A Chapter 7 bankruptcy is often referred to as a liquidation of debt. It allows the debtor to wipe out most unsecured debts, i.e., credit card debt, judgments, personal loans, etc. In order to qualify for Chapter 7 relief, you must be an individual, a partnership, corporation or other business entity. Relief is available regardless of the amount of debt that you have and regardless of whether you are solvent (able to pay debts by selling off assets) or insolvent (not able to pay off all debts by selling or mortgaging your assets). However, you are subject to the means test, which looks at "current monthly income" to determine if you are making or have previously made above the state median, which has been averaged over the last six months. If you make over the average median income, it must be determined after subtracting certain qualifying expenses, whether or not you have enough money left over to pay your debts. This is a way or "means" to weed out and prevent those individuals who can truly pay their debts from filing Chapter 7 bankruptcy.

If you had a bankruptcy petition dismissed due to failure to appear before the court or failure to comply with orders of the court, or if you voluntarily dismissed your case, you will not qualify to file until a 180-day period has passed.

Before filing for Chapter 7 bankruptcy there are certain documents you will need:

  • A certificate of completion for a debtor's education course - The Bankruptcy Code mandates that the debtor takes a credit counseling course within 180 days of filing the petition for bankruptcy. Your attorney will be able to assist you in finding an approved credit counseling agency where you will be able to complete these requirements.
  • Your credit report - Your attorney can direct you to the best vendor to use.
  • Tax returns for the past two years
  • Bank statements for 90 days following the date of filing the bankruptcy petition
  • Household income pay stubs for the previous 6 months - You need the household income because, even if your spouse is not filing bankruptcy with you, his/her income will still be counted. This does NOT mean that the bankruptcy will impact your spouses credit.
  • A statement regarding the value of your property (provided you own your own home)
  • Copies of registrations for any vehicles, boat, or other registered property you may have.

Your attorney will need this documentation in order to evaluate your exemptions and will use it to complete your bankruptcy petition and schedules. The schedules will list your assets and debts, current income and expenses, a statement of your financial affairs, and a schedule of executory contracts and unexpired leases.

After filing the bankruptcy petition, a trustee is assigned to your case and will set a 341 hearing date (also known as a Meeting of the Creditors) that will take place approximately one month after filing of the petition. The trustee will ask for certain documentation prior to the hearing. There are deadlines for turning this information over. Failure to turn the documentation over two weeks prior to the hearing could result in your hearing being pushed back or place your case in jeopardy of being dismissed. At the 341 hearing you can expect to be asked questions about information contained within your petition, such as your name, address, employer information and whether you have the right to sue anyone. You will need a government issued ID to show the trustee at the hearing as well. After the conclusion of the hearing, your discharge paperwork should arrive in the mail within approximately two months. From start to finish, a Chapter 7 bankruptcy should take only three months, and you are then on your way to a "fresh start"!

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