Chapter 7 bankruptcy is a process aimed at removing the burden of debts from folks who cannot afford to continue to pay even a modified amount. The courts don't take it lightly, and you should know the steps you'll be expected to follow.
Assess Your Situation
Contact your creditors and find out what is the total amount you owe. Likewise, take note of debts that can't easily be discharged, such as child support payments and tax bills. Similarly, be aware that secured debts, such as vehicle loans, can't be discharged. Instead, the collateral will be collected if you can't keep paying.
It's also wise to talk with an attorney to learn what types of property may be exempt in your state. Normally, a practical car, retirement accounts, household furnishings, and clothes are exempt.
Check Eligibility
The fastest way to qualify for Chapter 7 bankruptcy is to show that you made less than the median income for your state over the last six months. If that's not the case, you will be subjected to the longer mean testing process. This entails showing the court that your cost of living does not leave enough disposable income to pay down your debts.
Credit Counseling
In the vast majority of cases, credit counseling must be completed before filing for Chapter 7 bankruptcy. Make sure you'll be working with an accepted counseling services provider, too, because the court won't accept certifications from random providers. Likewise, make sure you get a certificate showing that you completed the courses because the court will want evidence.
Filing
Your case doesn't start until you submit the appropriate forms. If you are in a very difficult situation, you may submit an emergency filing that gets things rolling. However, this only buys you 14 more days to submit your forms.
Disclosures are a big part of filing. Be sure all creditors are listed because unnamed creditors can continue to seek collection of debts. Similarly, you'll need to show all of your income, debts, and bills. Property will have to be included, and you should also note any secured debts and which items are put up as collateral against them.
A trustee will be appointed, and you'll provide them with supporting documentation for your claims in the petition. The trustee will order a meeting of creditors, where they can file objections and even question you under oath. Afterward, the trustee will file a recommendation and the judge will rule based on it.
