Pin It

Guide to Filing Chapter 7 Bankruptcy

Info_lover | Jun 17, 2010 |

0 Comments | Rating: 0

Filing Chapter 7 bankruptcy can sometimes be an extremely effective solution to a very bad financial situation. But if entered into recklessly, it can well be one of the worst financial disasters someone can ever make. Thus, before you file for Chapter 7 bankruptcy, you need to make sure you know clearly what will be expected from you, what debt you will be cleared of, and what you won't.

Remember that most of your assets will be taken from you and sold so as to pay off your debts once you have filed for Chapter 7 bankruptcy. The exact assets will usually include personal property and belongings like homes, cars, jewelry, bank accounts and stocks. There who don't have many assets won't suffer much during this period.

Also consider that not all debts are cleared after filing Chapter 7 bankruptcy.

Stuff such as child support, taxes, student loans and other financial debts will not be cleared from your name when you file for Chapter 7 bankruptcy. If you are filing bankruptcy for these reasons, then you will have a black mark on your credit report for a long time – and for no reason.

If you have tried to do some research on whether or not filing a Chapter 7 bankruptcy is good for you and have concluded that it would be a wise move, then you must give yourself plenty of time to be prepared for the legal proceedings. As bankruptcy absolves a person of so many debts, it will be a long and drawn out process to go through. To expedite the process, you can do your part by making sure your financial records are well organized and that you are well aware of your current financial position.

When To File Chapter 7 Bankruptcy

There are times when filing Chapter 7 bankruptcy can be a good thing. For instance, if you are unable to pay off some extensive medical bills, then it may be a good time for you to file for bankruptcy.

Do you have any huge real estate debt or credit card debt? If you have some assets, it is mandatory for you to sell them off in order to repay the debts that you owe. The bankruptcy attorney will work through this process with you about different allowances that can be kept.

Before you consider filing for Chapter 7 bankruptcy, you should take a look at the exact amount you owe, and then factor in the interest rates which you would be paying on that principal amount so as to determine how long you would have to repay your debt. If the principal amount and interest fees accumulated over the life of the loan is very significant, then it is probably best that you file Chapter 7 bankruptcy.

Do You Qualify For Filing a Chapter 7 Bankruptcy?

The person to file chapter 7 should be someone who has little or no assets. Do you have any valuable assets? If so, you will have to relinquish anything that is of value because your creditors can stake claim on those goods.

Each state will regulate what you can and cannot keep when filing for bankruptcy. Some states may allow you to keep the equity that is locked into your home, while others may require you to force sell your home. In some areas, you will be able to keep your car and home as long as you are up to date with your debt repayments – provided that your creditors agree to continue with the payment plan. That said, there are some cases in which you can lose your home and your car to your bankruptcy filing in order to pay off the amount you owe to your lenders.

How to File Chapter 7 Bankruptcy

Once you have hired a bankruptcy attorney to help you, the next step will be to file a petition with the bankruptcy court in your state. When you have determined which court you will file your petition in, the next step is to provide them with information. You will have to file a detailed breakdown of your current income and expenses, along with a detailed draft of your liabilities and assets. If it pertains to your bankruptcy case, you'll also need to file a schedule of your contracts and any leases that are unexpired. The court will also need to have a record of your statement of financial affairs.

If you are married and have a spouse, you can file for bankruptcy jointly or as individuals. Keep in mind that even if you file for a joint petition, you will still be the one responsible for the filing of all the necessary documents that individual debtors must also file. Whoever your case trustee may be, it is a must for you to provide them with copies of your tax returns from the previous financial year and any tax returns that are pertinent to your bankruptcy case. In addition, the court will need you to show a certificate of credit counseling and any checks that you have received from employers or customers (assuming you received them within past 30 days before you filed for bankruptcy).