As the most common type of bankruptcy in the United States, Chapter 7 bankruptcy will fit your needs if your household earns below the median income in the state where you live or if your household passes a “means test”—a special calculation that allows you to file if the household income is considered low despite exceeding your state’s median household income. For example, the median household income for a family of four in Georgia is $69,170, so if your household earns below that annual income or passes the “means test” then you can file for Chapter 7.
Before filing for bankruptcy, you are required by law to take a credit counseling course. You can do this on your own by visiting the website of an approved bankruptcy credit counseling provider or after consulting with a bankruptcy attorney. If you have considered all of your financial options and still feel that Chapter 7 bankruptcy is the best solution for you, then you will go through the following process when filing.
- Hire a bankruptcy attorney.
While of course we would like you to consider Burrow & Associates as your bankruptcy attorney, this first step isn’t a sales pitch. Even the United States federal government recommends hiring an attorney. That’s because filing for Chapter 7 bankruptcy and navigating through the particulars of bankruptcy cases grows complex very quickly. If you file incorrectly or miss an important point, you could sabotage your entire case or lose assets such as your home or savings.
- Fill out any required Chapter 7 bankruptcy forms and schedules.
Paperwork, paperwork, paperwork. The brunt of your filing activity will involve filling out a variety of forms and schedules. This paperwork will include a lot of work to detail:
- Your property and assets. Unless specific property or assets are exempt (meaning protected from liquidation), this list of information will outline what the court can liquidate (in other words, to sell and turn into cash) in order to pay off the people and companies to whom you owe money (your creditors).
- Your debt and creditors. You will list out all of your existing debt and the creditors to whom you owe money. This list separates out secured debt such as a mortgage or auto loan (in which you partially own an asset and yet hold that property as if it were your own), which needs special handling during a bankruptcy case, from unsecured debt which can be eliminated in a Chapter 7 case.
- Your income, expenses, and means test. You need to thoroughly outline all sources of income and detail your expenses. This information is critical for confirming that you are eligible for a Chapter 7 bankruptcy filing.
A Chapter 7 bankruptcy attorney has extensive experience in correctly filling out these forms, simplifying the process for you, and helping you avoid pitfalls.
- File your Chapter 7 bankruptcy petition.
Filing a petition will require a fee, usually around $300. Once you file a petition, your creditors are required by law to stop contacting you about debt. At this point, they will need to contact your attorney if they have any questions or demands.
After you file, you will go through a series of steps that include attending a meeting of creditors and taking a debtor’s education course. Although termed a “meeting of creditors,” this meeting usually involves nothing more than answering questions under oath about your bankruptcy petition from a Chapter 7 trustee appointed by the court to administer your case.
Although creditors have the right to appear and ask you questions under oath, creditors usually do not show up. If all of your information is in proper order, a Chapter 7 bankruptcy usually takes about 4-5 months to complete. Once your case is closed and your debts have been discharged, then you’re able to rebuild your credit and get a fresh start.
If you have any questions about filing for Chapter 7 bankruptcy, call us today for a free consultation.