Steps For Filing Chapter 7 Bankruptcy

If you face overwhelming debt, you might have to file bankruptcy. When you file bankruptcy, you seek protection under the law from collection actions by your creditors. Depending on your circumstances when you file bankruptcy, you will have to find out whether you should consider filing chapter 7 or another chapter. Filing chapter 7 is commonly reserved for debtors who do not have sufficient income to support a repayment plan, and who therefore must liquidate their assets in order to repay as much of their debt as possible.

Making the Decision to File

It is essential to realize that, as is always the case when you file bankruptcy, filing chapter 7 is a complicated legal procedure that has serious repercussions for your immediate financial situation, as well as your credit future. So before you make up your mind about filing chapter 7, always consult with a legal expert who can advise you whether to file bankruptcy or pursue an alternative to filing chapter 7.

Credit Counseling

Once you’ve decided to file bankruptcy and filing chapter 7 is the correct form of debt relief for you, the first step is to seek credit counseling from a government-approved agency. This is mandatory before you file bankruptcy and you will have to provide proof of credit counseling to the court. After this, you will have to take the means test, which is also mandatory before you can file bankruptcy.

The Means Test

The means test determines, based on your income, whether you may file chapter 7 or chapter 13. If your income is below the state median you can take the next step in filing chapter 7. This step entails preparing the petition that communicates your request for filing chapter 7 to the bankruptcy court. A petition is an integral part of the process when you file bankruptcy, and you must take great care when you fill out all the forms for filing chapter 7.

Incorrect or incomplete petitions will not be accepted by the court. Once your petition for filing bankruptcy has been accepted, the trustee will notify your creditors of your request to file bankruptcy and the automatic stay goes into place. This means that while you are filing chapter 7, from this point in the procedure, your creditors must appeal to the court in order to continue any legal collection action against you. If all goes as expected, your assets will be liquidated and you will receive your official discharge.