How to file Chapter 7 Bankruptcy

Anyone struggling to repay debt has probably wondered about how to file Chapter 7 bankruptcy. The good news is that the process can be manageable, especially with the help of a bankruptcy lawyer. Here's a look at what to generally expect from the Chapter 7 bankruptcy filing process.

Hiring a Bankruptcy Lawyer

While bankruptcy laws do not require filers to work with a lawyer, the U.S. Courts system and most other experts recommend it. A lawyer can:

  • Clarify bankruptcy laws: Sorting through pages of legalese can add unnecessary stress to the bankruptcy process. Letting a lawyer translate and interpret bankruptcy laws, on the other hand, frees up the filer's time to focus on financial reorganization.
  • Explain the Chapter 7 means test: The qualifying means test involves a number of mathematical calculations and requires knowledge of several state and federal statutes. Working with a lawyer may eliminate the danger of miscalculating or misunderstanding the test's requirements.
  • Help with deadlines: Filing for bankruptcy requires meeting a number of court deadlines. Missing any of them could cause the court to dismiss a bankruptcy case without offering a debt discharge.
  • Help avoiding bankruptcy fraud: The penalty for bankruptcy fraud can be as high as five years in jail and a $500,000 fine. Bankruptcy fraud can be easy to prevent as long as you know what behaviors are prohibited by the court. Those familiar with bankruptcy laws (like bankruptcy lawyers) can be good allies for people looking to avoid breaking the law.

Many bankruptcy lawyers offer free initial consultations to curious filers. In this session, a filer can ask relevant questions and determine whether or not to hire the lawyer.

Taking Care of Pre-Filing Requirements

Before actually filing a Chapter 7 petition with the court, filers must complete two pre-filing requirements:

  • The credit counseling session: This is required of all bankruptcy filers. In order to complete the session, filers must visit a federally approved credit counseling agency and present proof of completion of the session to the court. This session is supposed to help potential filers weigh their options and to make sure that people only file for bankruptcy if a bankruptcy alternative would not work for them.
  • The Chapter 7 means test: This is a qualifying test for Chapter 7 bankruptcy. In order to get Chapter 7 protection, filers must demonstrate that they do not have the financial means to make payments under a Chapter 13 repayment plan.

It's important to note that the bankruptcy court will likely reject the bankruptcy petitions of any filer who has not completed these requirements. For more information about them, ask a bankruptcy lawyer in your area.


Filing the Bankruptcy Petition

Once a filer has completed all the prerequisites, it's time to learn how to file Chapter 7 bankruptcy itself. This starts with the bankruptcy petition, which is simply a series of forms that requests information about the filer's financial situation, including:

  • Income: This includes salary, tips, hourly wages, bonuses, pensions and any other source of income.
  • Expenses: This includes all money currently going out (utilities, rent/mortgage, car payments, childcare, etc.). A lawyer can help determine which expenses are required on the bankruptcy paperwork.
  • Debts: In this section, filers outline how much money they owe and to whom.
  • Assets: This section requires filers to list their possessions (including property, cash, personal possessions and more). Again, an attorney can help figure out what's required in this section.

Completing the bankruptcy petition is an extremely important part of the bankruptcy process. Any information omitted or entered incorrectly could prompt the court to charge a filer with bankruptcy fraud and even dismiss the filer's case without discharge.

Because of the complex legal language used on the bankruptcy petition forms, a lawyer's help here can be invaluable.


Learn More about How to File Chapter 7 Bankruptcy

If you're ready to get an idea of how filing Chapter 7 bankruptcy will impact your life, it's time to talk with a bankruptcy lawyer about your situation.

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