The Requirements To File A Chapter 7 Bankruptcy
Last week I wrote about the Requirements to File a Chapter 7 Bankruptcy Case. I wrote who can file chapter 7 case, the means testing requirement involved in chapter 7 cases, and the requirement that a chapter 7 debtor have a credit counseling briefing prior to filing a chapter 7 case. This week, I will look at the question that, while it does not come up often, can be quite important in the few cases where it is an issue: the venue of the bankruptcy case. Then I will write about what a chapter 7 debtor has to do to obtain a discharge.
Can I Keep My Property If I File Chapter 7 Bankruptcy
In 95 percent of Chapter 7 bankruptcy cases, people are able to keep all of their property. The Bankruptcy Code has rules in place rules called âexemptionsâ that allow you to keep several types of property, such as cash, clothes, furniture, cars, etc. up to a certain dollar amount, known as âexemption limits.â
The specific exemptions you can use to keep your property depend on your state. Many states have âwildcard exemptionsâ that allow you to keep any property as long as itâs worth less than a certain amount. For the 19 states that permit âfederal bankruptcy exemptions,â the wildcard ceiling is a little over $10,000, meaning that you can keep property that adds up to be less than about $10,000.
If your property value exceeds the exemption limit that applies, the trustee may seize the property and sell it to pay back your creditors. This is why people call Chapter 7 âliquidation bankruptcy,â although any liquidation rarely takes place.
Property that isnât protected by exemptions is considered ânonexempt property.â The most common forms of nonexempt property are expensive cars and homes.
Documents You’ll Need To Complete Chapter 7 Forms
The average Chapter 7 bankruptcy petition is approximately 50 pages in length, so it shouldn’t come as a surprise that you’ll need a lot of information to complete the required forms. Being organized will help you complete the bankruptcy forms efficiently.
Here are some of the documents you’ll need to get started:
- six months of paycheck stubs
- six months of bank statements
- tax returns
- current investment and retirement statements
- current mortgage and car loan statements
- home and car valuations
- property list with values
- repair estimates for damaged property
- a current credit report
- your Driver’s license and Social Security card
- a
If you plan to hire a Chapter 7 bankruptcy attorney, bring copies to the initial consultation. Not only will doing so help the lawyer assess your case but getting documents from clients can be challenging. Showing up prepared will make you a more desirable client.
You’ll find a list of the required official bankruptcy forms and instructions for finding them in Free Bankruptcy forms.
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Who Should Wait To File
Certain activities can complicate a Chapter 7 bankruptcy and waiting a little bit of time can help. If you’re still relying on your credit cards to make ends meet or you’ve made large purchases in the last 6 months, then it’s best to wait to file and pay off your most recent charges first.
If you paid back or transferred property to a family member or friend in the last year, then itâs best to wait to file, if you can. You have to disclose these activities in your bankruptcy paperwork and your trustee will ask you about them.
If you’re suing someone or planning to sue someone, then itâs best to hold off on filing bankruptcy until you know the final outcome of that case, if possible. People often delay Chapter 7 bankruptcy if theyâre expecting a personal injury settlement.
Also, if you owe your landlord money and you don’t plan to move, try to catch up on missed rent payments before filing. The same generally goes for car loans, if you want to keep the car.
Finally, if you expect your financial situation to get worse, then you may want to delay your filing. You can only file Chapter 7 bankruptcy once in an 8 year period, so you donât want to file if you know that youâre going to fall into more debt.
Eligibility To File A Chapter 7 Bankruptcy Case
In order to be eligible for a Chapter 7 case, you must receive credit counseling from an approved agency within 180 days prior to filing. When you file, you are required to provide the court with a certificate from the agency describing the services you received along with a copy of any debt repayment plan you and the agency may have developed. After you file, you will also have to complete an instructional course concerning personal financial management in order receive a discharge. Classes are run by independent agencies and require additional costs. A list of accredited credit counselors can be found at the United States Trustee’s website, .
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Chapter 7 Bankruptcy Documents Needed After Filing
The court will want verification that the information provided in your petition is accurate and that you attended the required post-filing educational course. Here’s a list of what you’ll need:
- 60 days of paycheck stubs or other proof of income received from an employer
- your most recently filed tax return
- 60 days of bank statements
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Doesnt Filing For Bankruptcy Ruin My Reputation And My Life
Not if it gets you out of debt. You might be able to run from creditors for a while, but eventually the stress of that overwhelms people. Bankruptcy lets you stop running and start over again. It may take a few years for you to get loans and obtain credit again, but at least youll have that opportunity. Bankruptcy is meant to give people who made financial mistakes a second chance. In todays turbulent economy, that is a good thing.
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Talk To A Bankruptcy Lawyer
Need professional help? Start here.
Self-help services may not be permitted in all states. The information provided on this site is not legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or will be formed by use of the site. The attorney listings on this site are paid attorney advertising. In some states, the information on this website may be considered a lawyer referral service. Please reference the Terms of Use and the Supplemental Terms for specific information related to your state. Your use of this website constitutes acceptance of the Terms of Use, Supplemental Terms, Privacy Policy and Cookie Policy. Do Not Sell My Personal Information
What Happens If My Income Is Above The Median Income In New York For A Family Of My Size Does That Mean I Cannot File Chapter 7 Bankruptcy
When your income is above the median income for New York state for a family of your size, the means test results will determine your chapter 7 bankruptcy eligibility.
Just because your income is above the median doesnt mean that youre excluded from Chapter 7. You can subtract actual expenses to help determine whether you have enough income left over after you pay your expenses and to repay all or part of your debt.
The means tests is a complicated calculation and thats why it may be in your best interest to speak with a bankruptcy law professional. The experienced bankruptcy law attorneys at Macco Law can help you get the legal advice you seek with your means test.
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Alternatives To Chapter 7
Debtors should be aware that there are several alternatives to chapter 7 relief. For example, debtors who are engaged in business, including corporations, partnerships, and sole proprietorships, may prefer to remain in business and avoid liquidation. Such debtors should consider filing a petition under chapter 11 of the Bankruptcy Code. Under chapter 11, the debtor may seek an adjustment of debts, either by reducing the debt or by extending the time for repayment, or may seek a more comprehensive reorganization. Sole proprietorships may also be eligible for relief under chapter 13 of the Bankruptcy Code.
In addition, individual debtors who have regular income may seek an adjustment of debts under chapter 13 of the Bankruptcy Code. A particular advantage of chapter 13 is that it provides individual debtors with an opportunity to save their homes from foreclosure by allowing them to “catch up” past due payments through a payment plan. Moreover, the court may dismiss a chapter 7 case filed by an individual whose debts are primarily consumer rather than business debts if the court finds that the granting of relief would be an abuse of chapter 7. 11 U.S.C. § 707.
Debtors should also be aware that out-of-court agreements with creditors or debt counseling services may provide an alternative to a bankruptcy filing.
Requirements For Chapter 7 Bankruptcy
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In a Nutshell
Written byAttorney Andrea Wimmer.
Individuals, spouses, and business entities can qualify for relief under Chapter 7 of the Bankruptcy Code. There is a little bit more to it than that, however. Everyone seeking debt relief in the form of a bankruptcy dischargeunder Chapter 7 must meet certain requirements. Some requirements determine whether you are eligible to file Chapter 7 in the first place. Other requirements determine whether youâre eligible to receive a bankruptcy discharge in a Chapter 7 bankruptcy. Since getting your discharge is your primary goal in filing Chapter 7, your first step when deciding to file is learning more about what these requirements are. What follows is an overview of the requirements to file Chapter 7 bankruptcy and the requirements to getting your Chapter 7 discharge.
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Which One Should I Choose
Chapter 7 is, by far, the more popular form because its cheaper, quicker and effective at relieving responsibility for debt if you qualify! And thats a big if. You must pass a means test, meaning your disposable income is under the median income in your state. If you dont qualify for Chapter 7, you can always fall back on Chapter 13.
You Can Repay Some Debt
If a filer’s income is more than their state’s median income, it is necessary to look at how much disposable income the filer has left after paying “allowed” monthly expenses, such as rent and food, to determine whether the filer has enough money to pay some of their unsecured creditors through a Chapter 13 repayment plan.
If the filer has a certain amount of income left over to pay some unsecured creditors, the court will dismiss the Chapter 7 filing.
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How Long Does It Take To Do A Chapter 7 Bankruptcy
Home » Frequently Asked Questions » How Long Does It Take to Do a Chapter 7 Bankruptcy?
The average Chapter 7 bankruptcy case for an individual or married couple is pending for about 4 months before it is fully closed. This time frame can vary though. According to the U.S. Courts, the following timelines may serve as a general guide on how long it takes to do a Chapter 7 bankruptcy:
- Between 21 and 40 days after filing, the case trustee will hold a meeting of the filers creditors. Certain restrictions may apply if a regular U.S. trustee or bankruptcy administrator is unavailable.
- Within 10 days of this meeting, the U.S. trustee will report to the court if the case appears to be an abuse of the bankruptcy process.
- Within 90 days of the meeting, any unsecured creditors must file a claim with the court .
Many people who file for Chapter 7 bankruptcy are able to retain all of their assets. Most bankruptcy cases generally receive a discharge order from the court between 60 and 90 days of the initial meeting of creditors.
Whats Life After Bankruptcy Like How Long Is Chapter 7 Bankruptcy On Your Credit Report
Most people who file Chapter 7 bankruptcy feel a sense of relief that all of their credit card and medical debt, along with other dischargeable debt, is totally gone. Many people see their credit scores improve if they had credit scores in the sub-600 range.
The bankruptcy process often creates a new sense of confidence, where people feel more comfortable with their financial affairs than when they began. Part of the reason is the two required personal finance courses. Chapter 7 bankruptcy also forces you to reflect on your financial situation.
People who file Chapter 7 bankruptcy usually get more serious about budgeting, saving, and rebuilding their credit, using tools like credit builder loans and secured credit cards.
Chapter 7 bankruptcy stays on your credit report for 10 years, but many people who file see their credit improve and are able to get approved for a mortgage within a few years if they make good financial decisions post-bankruptcy.
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Basics And Eligibility For Chapter 7
Chapter 7 bankruptcy focuses on liquidating your nonexempt assets, if you have any, to repay creditors before your remaining debt is discharged. The process can get rid of many types of unsecured debt such as credit card debt, medical bills, and utility bills.
Chapter 7 is the most common of the bankruptcy options available to individuals. Another bankruptcy option available to individuals is Chapter 13, which focuses on debt repayment. Chapter 12 bankruptcy is a relatively new option available to âfamily farmers” and âfamily fisherman.”
To qualify for Chapter 7 bankruptcy you must meet specific eligibility requirements, including a “means test.” The purpose of the test is to prevent high-income earners from qualifying for Chapter 7.
You pass the means test automatically if your average monthly income for the six months before filing for bankruptcy is less than or equal to your state’s median income.
If your income is higher than your state’s median income, you may still pass the means test if it’s determined that you don’t have enough disposable income to pay your creditors after taking into account your income, expenses, and family size.
Chapter 7 Bankruptcy: What Is It Should I File How To File
Upsolve is a nonprofit tool that helps you file bankruptcy for free. Think TurboTax for bankruptcy. Get free education, customer support, and community. Featured in Forbes 4x and funded by institutions like Harvard University so we’ll never ask you for a credit card. Explore our free tool
In a Nutshell
Chapter 7 bankruptcy is a common legal process to clear your debt, but itâs not right for everyone. Letâs take a look at some bankruptcy basics to help you learn about it and decide whether it’s right for you.
Chapter 7 bankruptcy is a powerful legal tool in the United States that allows you to totally erase many debts, including credit card debt, medical debt, car loans, and payday loans. Experts estimate that over 39 million Americans have filed for bankruptcy. Itâs more common than most people think.
One good question to ask yourself if youâre considering Chapter 7 bankruptcy: do I have more debt than Iâll ever be able to pay back, given my current income and property? If the answer is yes, then Chapter 7 bankruptcy may be the right option.
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Before You File For Chapter 7 Speak With A Bankruptcy Lawyer
Stuck in debt? Not sure how or when you will be able to pull yourself out? If this all seems a little overwhelming, it doesn’t have to be. But without a complete and nuanced understanding of the law, you may not get the most desirable results. Get some peace of mind today and contact a local bankruptcy attorney.
Who Qualifies For Chapter 7 Bankruptcy Should I File
There is a difference between who is allowed to file and who should file. Most people who earn under the median income for their state, based on their household size, are able to file. This is because they pass the âmeans test,” according to bankruptcy laws. The means test takes into account your average monthly income over the last 6 months.
If you donât have a job or earn near the minimum wage, you will likely qualify for Chapter 7 bankruptcy. If you don’t pass the means test, you can file a Chapter 13 bankruptcy but not Chapter 7.
Folks looking for a fresh start typically fall into one of three categories:
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Those who should file for Chapter 7 bankruptcy right now
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Those who should wait a little bit of time and then file for Chapter 7 bankruptcy
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Those who should not file for Chapter 7 bankruptcy.
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