How to File for Chapter 7 Bankruptcy
When an individual files for bankruptcy, they are seeking to be released from their responsibility to pay back creditors; that is, to have their debt discharged. While not all debt may be discharged in a bankruptcy (see What’s Chapter 7 Bankruptcy?), debtors may receive relief from paying back unsecured debt—such as credit card debt—when they file for Chapter 7 bankruptcy. If you are considering bankruptcy, it is important that you consult a bankruptcy attorney who is familiar with your state’s laws to help you file your claim. Whether or not you choose to retain an attorney, there are several steps you must take when filing for Chapter 7 bankruptcy.
The first thing that you must do is determine if you are eligible to file a Chapter 7 bankruptcy. Individuals, partnerships, corporations and other business entities are eligible to apply for Chapter 7 bankruptcy but must pass the means test and receive credit counseling from an approved credit counseling agency within 180 before filing for Chapter 7 bankruptcy (see What is Chapter 7 Bankruptcy?).
Once you’ve determined that you are eligible to file for Chapter 7 bankruptcy, the first thing you must do is file a petition with bankruptcy court. Along with your petition you must include the following information:
- Schedules of assets and liabilities
- A schedule of current income and expenditures
- A statement of financial affairs
- A schedule of executory contracts and un-expired leases
When you file your petition for Chapter 7 bankruptcy, you will be charged a $245 case filing fee, a $39 miscellaneous administrative fee, and a $15 trustee surcharge. In some circumstances, you may be able to pay these fees in installments.
When your case is assigned to a trustee, USCourts.gov states that you must provide your case trustee with the following information:
- A copy of your tax return for the most recent tax year
- A certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling
- Evidence of payment from employers, if any, received 60 days before filing
- A statement of monthly net income and any anticipated increase in income or expenses after filing
- A record of any interest the debtor has in federal or state qualified education or tuition accounts
Once you file for Chapter 7 bankruptcy, most collection actions from your creditors must stop. At this point, your creditors may not file lawsuits against you, garnish (or continue to garnish) your wages, or threaten you in any way. Your creditors will be notified of your bankruptcy petition by the bankruptcy clerk. The bankruptcy clerk will notify all creditors whose names and addresses appear on the list you provide in your petition.
When your petition is received, your assigned trustee will then make sure you are aware of the effects filing for Chapter 7 bankruptcy will have on your life (see How will Filing Bankruptcy Affect Your Life?) and then liquidate your nonexempt assets (see What’s Chapter 7 Bankruptcy?). If you have no nonexempt assets, creditors will receive no compensation for any of the debt that is owed to them. If you do have assets that are nonexempt, the money received in liquidation will be divided among your creditors in order of importance. This order is determined by the laws governing each state.
Filing for bankruptcy may be done on your own or through the assistance of an attorney. Since filing for bankruptcy is a complicated process that varies by state, it is generally a good idea to consult a bankruptcy attorney to make sure that your claim is not dismissed. If you are determined to file your own bankruptcy, forms are not available from the court but may be purchased from http://secure.uslegalforms.com/cgi-bin/forms/query.pl?S-C-A-A-bankruptcy|alllaw.