Filing Chapter Seven Bankruptcy
There are two alternatives for filing bankruptcy as a consumer, chapter 7 and chapter 13 bankruptcy. Chapter 7 is often referred to as liquidation as all of your property that is not exempt is sold in order to pay off your creditors. Exempt property is that property that the bankruptcy trustee allows you to keep in order to continue living a normal life, like a automobile, clothes, furniture to sit on, etc. Each state has their own bankruptcy exemptions, as well as a set of Federal exemptions that can be used in some states.In order to qualify to file a ch 7 bankruptcy petition, have to be an individual, not a business or farm, you must complete a credit counseling course from an approved agency within the 180 days before filing for ch 7 bankruptcy relief, and qualify the means test which is filled out with your petition.In a ch 7 bankruptcy petition, you will have to file schedules that list your debts, property, earnings and bills. Copies of tax returns, pay stubs and credit counseling certificate will also have to be filed. Married bankruptcy filers must provide the spouses information even if they are not going to be filing bankruptcy together so the bankruptcy court can determine the households ability to pay the debts.When finishing your petition, you will have the option to keep paying and keeping your property if you are able to, such as your dwelling or automobile, by making a reaffirmation agreement with the creditor. By reaffirming the debt you are acknowledging that you intend to make payments. If the trustee sanctions your reaffirmation agreement, the creditor may be able to repossess the property if you do not pay.When you file your ch 7 bankruptcy documents you will have to pay up a filing fee of $299. This cost can be paid in installments, up to 4 no later than 120 days after filing your petition. Once the petition is filed, the bankruptcy stay is in effect, creditors cannot call, collect or file lawsuits. Each of your credit companies will be notified that you have filed bankruptcy and given a chance to reply. A 341 meeting will happen within 20-40 days. During this group meeting, the trustee and your creditors may ask questions about your petition. Within 10 days of the meeting the trustee will rule on whether the case should be presumed as abusive under the means test. If the trustee finds a presumption of abuse you can be forced to file ch 13 instead.The bankruptcy trustee is then responsible for liquidating your assets that are not exempt, meaning they are not protected by filing bankruptcy, and giving the proceeds from the sales to your unsecured creditors. After liquidation a discharge is granted to you, which wipes out the rest of your debts.
