If you have decided to officially declare bankruptcy, you may want to consider Chapter 7 Bankruptcy first. Chapter 7 is the most common type of bankruptcy and simpler than the other types. The purpose is to eliminate one’s debts and have no further liability for them. You will need to evaluate your personal eligibility, the advantages, and the impact of such a filing before moving ahead on it.
How to File For Chapter 7 Bankruptcy
The typical debtor who files for this type of bankruptcy has few or no assets to lose. The procedure involves liquidation of one’s assets. It is carried out according to the U.S. Government Bankruptcy Code and takes place through the courts. The entire process costs $245 and lasts 4-6 months.
Chapter 7 Bankruptcy Trustee
Once a debtor has submitted a file to the court, a trustee is appointed to the case according to Chapter 7 bankruptcy laws. The role of the trustee is to collect the debtor’s property and distribute it to the appropriate creditors. After the filing and before the final decision on the case is made, the trustee holds a meeting with creditors and the debtor, and the debtor’s spouse, to resolve the disposition of the debtor’s assets.
Eligibility Under Bankruptcy Chapter 7 Laws
Before proceeding with the filing, a debtor will want to review the eligibility requirements according to Chapter 7 bankruptcy laws. Officially, an individual or a business entity may file for Chapter 7 bankruptcy. However, it is not especially suited to the needs of a business which may prefer one of the other types of bankruptcy. One main requirement for an individual filer is that they have received credit counseling from an approved credit counseling service in the previous six months.
Another prime requirement to file Chapter 7 bankruptcy is based on income. Anyone whose income for the previous six months averaged more than the median income of a family of the same size living in the same state may not be allowed to apply for bankruptcy under chapter 7. If your income is greater than your current expenses and the extra amount would be sufficient to pay off part of your debts over a five year period, then it would probably be advantageous to select a different form of bankruptcy.
Advantages With Chapter 7 Bankruptcy
The obvious advantage to Chapter 7 bankruptcy is the option for the debtor to retain some of their property. A Chapter 7 Bankruptcy filer will have three choices regarding property pledged as collateral for a loan. They may choose to redeem the property. In such a way, a debtor may, if financially able, to continue to pay for a car or a house. A second choice is to negotiate a new contract with the creditor. The third choice is to allow the property to go to the creditors.
Filing a Petition under Chapter 7
Once an individual decides to file a petition that they be granted bankruptcy status, they will need to complete the extensive paperwork. Official bankruptcy forms are available for download from the Internet. The applicant will be asked to list all income, living expenses, including that of spouse, all debts, the identity of creditors, and property owned, including exempt property, and a copy of their most recent tax return.
The filer then will submit the forms to the clerk of the court in the area where they reside and pay the fees. This act will start the bankruptcy procedure. It also will create a halt to all collection attempts made on the debtor.
Chapter 7 Discharge
The discharge process has two results. It frees the filer from the obligation to pay their discharged debts at all. It also prevents creditors from continuing to attempt collection, even including telephone calls. These effects usually come into force two to three months following the trustee’s meeting.
Chapter 7 Bankruptcy Attorney
Bankruptcy is divided into different Chapters (categories). If you wish to file as an individual you can do so under chapter 7 or chapter 13 (more on Chapter 13 Bankruptcy).
A professional bankruptcy attorney will be able to answer all of your chapter 7 bankruptcy questions and also be able to guide through the entire process. A bankruptcy attorney may practice in only one or many types of bankruptcies and/or chapters.
Click here to find a chaper 7 bankruptcy attorney.