How to File Chapter 7 Bankruptcy
Are you experiencing debt and looking for a solution? If you are considering bankruptcy, learn more about the most common type of bankruptcy, how to qualify, and how to file Chapter 7 bankruptcy.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is the most common form of bankruptcy in the United States. Filing for Chapter 7 bankruptcy means that a person may no longer owe certain types of debt previously owed to creditors. It’s a wonderful way to start over. A person who can’t keep up with credit card payments, for example, will benefit from filing a Chapter 7 bankruptcy because he or she will no longer have any obligation to the creditor. The debt disappears.
Do I qualify for Chapter 7 Bankruptcy?
In order to qualify for Chapter 7 bankruptcy, you must meet certain income requirements. Chapter 7 bankruptcy is intended for people who earn less than the median state income. A spouse’s income is included in the calculation unless the couple live apart. The median state income increases based on the number of people a debtor lives with. Most property in a Chapter 7 bankruptcy is exempt, which simply means that it’s protected from creditors. A person filing for Chapter 7 bankruptcy can keep a certain amount of equity in a house, vehicles, and household goods for example without fear of losing it to creditors by filing. For those who earn more than the median state income or whose equity exceeds the exemptions, a Chapter 13 bankruptcy is a possibility.
How to File Chapter 7 Bankruptcy
When filing Chapter 7 bankruptcy, the first step is to contact an experienced bankruptcy attorney. The attorney will review the situation and determine the viability of the claim. If you and your attorney decide to proceed with the filing, your attorney will likely advise you not to pay back friends or family prior to filing, to stop using credit cards and to stop paying back on any unsecured debt. It is important to inform your attorney prior to making any large purchases or selling any property.
Your attorney will ask you to gather the necessary documentation to file for Chapter 7 bankruptcy, including six months of paystubs or other support of income, bank statements, copies of taxes filed in the past two years, bills, house documents, car documents and any other pertinent financial statements. With these documents, an experienced attorney will be able to properly prepare the bankruptcy petitions.
As part of the filing process, two credit counseling classes are required, one prior to filing and one post-filing.
A meeting with the bankruptcy trustee will take place approximately five to six weeks after the filing. Trustee meetings are typically short and informal. The trustee is looking for non-exempt assets to distribute to the creditors.
Once the claim is filed, creditors can no longer pursue legal action to collect the debt. After completing the trustee meeting, creditors have 60 days to object to the discharge (i.e., the disappearance of your debt). In most cases, the discharge occurs about three to four months after the trustee meeting. The discharge is exciting because in most cases it means that the unsecured debt, and the unwanted secured debt, is gone for good.
Do you have additional questions about how to file for Chapter 7 bankruptcy? Contact a skilled Colorado Springs Chapter 7 bankruptcy attorney at law firm of Diane K. Bross to schedule a free initial consultation where we can address any of your concerns and answer your questions.