Chapter 7 Bankruptcy

Who Qualifies for a Chapter 7 Bankruptcy?

Not everyone is eligible for filing a Chapter 7 bankruptcy. To qualify for this form of bankruptcy you:

• Will have to pass the means test, which examines your assets, income, and expenses.
• Cannot have previously completed a Chapter 7 bankruptcy within the past 8 years or a Chapter 13 bankruptcy within the past 6 years.
• Cannot have previously filed either a Chapter 7 or Chapter 13 bankruptcy petition within the past 180 days that was dismissed due to not appearing in court, failing to comply with court orders, or because you chose to dismiss your own filing.

How Do I File for a Chapter 7 Bankruptcy?

The process of filing for and completing a Chapter 7 bankruptcy generally takes about 6 months. To help get you started, here is a quick overview of several steps you should take:

• Get credit counseling: Within 180 days before filing for bankruptcy, you must complete pre-file bankruptcy counseling from a qualified nonprofit credit counseling agency.
• Hire an attorney: Find an attorney who is experienced in handling such matters is crucial early on in the process. This is not the type of situation you will want to handle yourself. If you are missing any paperwork or something is incomplete, this can lead to your case being thrown out or result in certain debts not being dismissed.
• File the necessary paperwork: This is where your attorney can already begin assisting you since he or she will be able to help with what needs to be filed and on advising you on what documentation must be gathered.
• Trustee will take over: After your petition is filed, the court will appoint a bankruptcy trustee who will manage the process.
• Meet with your creditors: Your trustee will arrange a meeting with you, your bankruptcy attorney, and your creditors where you will be expected to answer questions regarding your bankruptcy forms and finances.
• Determine your eligibility: Your trustee will confirm if you are eligible for a Chapter 7 bankruptcy after reviewing your paperwork.
• Handle nonexempt property: Nonexempt property includes jewelry or equity in a home or car if it is higher than the state’s exemption limit. Your trustee will determine if any of these assets are worth selling and give the proceeds to your creditors.
• Secured debts: There are a few ways to manage secured debts. The property being held as collateral can be returned to the creditor, or you can redeem the collateral by paying what it is worth now. You also have the option of reaffirming the debt by arranging to exclude it from the bankruptcy so you can continue to pay it.
• Education course: You will also be expected to take an educational financial course from a qualified nonprofit credit counseling agency before your case is discharged.
• Discharge: About 3 to 6 months after you file your petition, your case will be discharged. This means all eligible debts will be forgiven and your case will be closed.