Chapter 7 Bankruptcy Basics

A Chapter 7 Bankruptcy is ideal for those that have a large amount of unsecured debt. In a Chapter 7 Bankruptcy, the trustee gathers and sells the debtors unexempt assets and uses the proceeds to pay off some of the creditors. The remaining debts are subject to be discharged. This does not mean that you will lose your possessions. All states have exemptions that allow you to keep certain assets. In many cases you will not lose any of your possessions. Do not assume you will lose your possessions. Talk to a local bankruptcy attorney to see how a Chapter 7 Bankruptcy can work for you.

Chapter 7 Bankruptcy Eligibility

A Chapter 7 Bankruptcy begins with the debtor´s attorney filing a voluntary petition, schedule of assets, schedule of liabilities, schedule of income, schedule of expenditures, and other related documents on behalf of the debtor. You must also meet the Chapter 7 Bankruptcy means test. The means test places a limit on those that can file a Chapter 7 Bankruptcy based on income level. The amount of debt or the solvency or insolvency of a debtor does not determine eligibility for a Chapter 7 Bankruptcy. There are also limits based on prior bankruptcies and a requirement for mandatory pre-filing credit counseling.

Chapter 7 Bankruptcy Timeline

These are the basic steps involved in all Chapter 7 Bankruptcies:

1. Consult with a bankruptcy attorney to determine eligibility and have your questions answered.
2. Gather the necessary documentation and deliver them to your attorney so your attorney can form your Chapter 7 Bankruptcy case.
3. Once your case is filed you will be notified of the date and time of your meeting with the trustee.
4. Wait for the final order of discharge.
5. Get back to your life!

This entire process can often take less than four months!

How a Chapter 7 Bankruptcy works

A Chapter 7 Bankruptcy begins with a debtor filing a voluntary petition, schedules of assets and liabilities, schedules of income and expenditures, and other related documents. The debtor is also required to provide a copy of their most recent tax filing, some proof of income, and proof of meeting the pre-filing credit counseling requirement. Your attorney will walk you through these requirements. Married couples may file joint petitions. Immediately upon filing the voluntary petition the automatic stay takes effect. This is a temporary injunction that stops all: collection attempts; repossessions and foreclosures; and creditor harassment. The automatic stay is taken very seriously. Creditor violations of the automatic stay may be acted on by your attorney and may result in damages paid to you. Between 20 to 40 days after the filing of the voluntary petition, the trustee will hold the meeting of the creditors. You must attend this meeting and have your social security and photo identification available. The trustee may request additional documents. It is important to cooperate with the trustee and supply any requested documents as soon as possible. Generally, you will receive your discharge in 60 to 90 days after the meeting of the creditors. This entire process is made simple with the help of a bankruptcy attorney!