How to file chapter 7 bankruptcy
Want to know how to file chapter 7 bankruptcy yourself! If you’ve already tried alternatives such as debt consolidation, consumer credit counseling or debt consolidation loans and, you meet the new bankruptcy “means test”, then chapter 7 may be your BEST option!
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CAUTION: According to the new Bankruptcy Abuse Prevention and Consumer Protection Act, effective October 17, 2005, you must receive credit counseling from a government approved agency within the six months preceding your application for filing chapter 7 bankruptcy!
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To file chapter 7 bankruptcy yourself you need a good understanding of the process, the proper forms, information on where to file this chapter of the federal bankruptcy code and, the willingness to fill out your own forms and file your own chapter 7 bankruptcy.
This site provides in-depth coverage of chapter 7 bankruptcy including FAQs, FREE on-line forms, information on how a chapter 7 works, the role of the Trustee, the bankruptcy discharge process and exemptions and alternatives to filing chapter 7 bankruptcy for people who wish to file their own bankruptcy.
Chapter 7 bankruptcy may be your best option if you’re:
- Unable to make minimum payments on your credit cards!
- Credit card debts, personal loans or other debts never seems to go down!
- Creditors constantly call demanding their money!
- Being called by one or more debt collectors demanding immediate payment!
- If debt collectors are demanding more money than you can afford!
- You’re facing foreclosure, wage garnishment or other lawsuits!
Let’s begin with what a chapter 7 bankruptcy can do for you?
Chapter 7 bankruptcy provides an “order of relief” that triggers an “automatic stay” thus all creditors and collectors are prohibited from pursuing you or your property outside of the bankruptcy proceeding. This is especially important if you’ve received a foreclosure notice!
However, the new Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 requires credit counseling within the six months preceding your application for filing chapter 7 bankruptcy! Until you’ve received this counseling and can prove it, you will not be able to file chapter 7. Also, the new law expands the number of exemptions from the automatic stay.
The expansion includes:
- Income withholding under court order
- Suspension of driver’s license
- reporting of overdue child support to credit reporting agencies
- interception of tax refunds
- enforcement of medical obligations
Chapter 7 bankruptcy is also known as a “straight bankruptcy” or “liquidation bankruptcy” because the Trustee gathers and sells your nonexempt assets (if you have any, most people who file chapter 7 have none) and then distributes the proceeds to your creditors in accordance with the provisions of the bankruptcy code.
You are permitted to retain certain “exempt property” but all remaining assets are liquidated (sold) by the bankruptcy court Trustee. You should also understand that if you file a chapter 7 bankruptcy you could loose some or all or your property!
542(d) The Chapter 7 Bankruptcy Code allows you to keep property or assets by claiming them as “exempt” under either Federal or State exemption laws; whichever applies to your State. See in-depth info on exemptions here: Chapter 7 Bankruptcy Exemptions
Who can file Chapter 7 Bankruptcy?
Chapter 7 bankruptcy relief is available to individuals regardless of the amount of debt or whether they are solvent or insolvent. It is not available to partnerships or corporations.
IMPORTANT: You cannot file any bankruptcy chapter if, during the preceding 180 days, a prior bankruptcy petition was dismissed due to your willful failure to appear before the court or comply with orders of the court or you voluntarily dismissed the previous case after creditors sought relief through the bankruptcy court to recover property upon which they hold liens.
Filing chapter 7 bankruptcy usually results in a discharge of debts, but your right to a discharge is not absolute, and some types of debts are not discharged. Additionally, a chapter 7 bankruptcy discharge does not remove a lien on property.
How does it work?
It’s a pretty straight-forward process.
- Note that discharges are granted in 99% of all chapter 7 bankruptcies!
- Gather the required information: creditor’s names, addresses and amount of debt, source, amount, and frequency of your income and a list of all your property; and detailed list of your monthly living expenses;
- Fill out the bankruptcy forms (AKA paperwork, petition or case file)
- File your bankruptcy with the nearest federal court bankruptcy court locations
- Once chapter 7 bankruptcy paperwork is filed, the court issues an “automatic stay” stopping all collection actions. Creditors are prohibited form initiating/continuing lawsuits or wage garnishment, even telephone calls demanding payments must stop!
- Attend the 341 meeting. The purpose of this meeting is for creditors (if any even show up) to question your claim that you are unable to pay your debts. They want to know if you could pay at least 50 cents on the dollar and if not, they usually don’t waste their time objecting to the discharge)
- The Trustee liquidates all assets (except those you’ve exempted).
- About 60-90 days after the 341 meeting, the court grants your discharge.
- A few days later you’ll receive the discharge notice in the mail releasing you from personal liability for discharged debts. (creditors are prevented from taking any action against you or your exempted property)
- Begin rebuilding your credit rating!
How much does filing a chapter 7 bankruptcy cost?
Currently, the federal bankruptcy courts charge:
- Case Filing Fee: $200
- Miscellaneous Administrative Fee: $30
- Trustee Surcharge: $25
For a total of $255. This fee can be paid in up to 4 payments over 120 days. (Filing fees are subject to change so be sure to check with the court clerk)
Note: If a joint petition is filed, only one filing fee and one administrative fee is charged. However, if filing jointly, both parties require a credit counseling certificate.