What is chapter 7 bankruptcy?
Chapter 7 is the bankruptcy which is different from 11 and 13, and people prefer filing it because it is much quicker, and no filer is required to pay any of their debt back. So who can file, then? What forms will you need? And what is the overall process like? We will explain it to you step by step.
Let’s get right into it.
Who Can File Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is popular, but not everybody qualifies for it. Only those people whose gross income is lower than their state’s median income can file. You can still file if it is higher than that, but you do not have enough money to complete a chapter 13 repayment plan after paying all of your monthly debts. Also, if you have already received a chapter 7 discharge in the last six to eight years, you cannot file again until year nine.
Which Forms are Needed?
Your bankruptcy will have begun as soon as you have filed a petition and any other forms your local bankruptcy court might have given you. These forms usually ask for your property information, current income and monthly living expenses, any debts you might have, property claims, property owned, and property sold during the last two years.
Apart from these forms, you will also need to fill credit counseling forms either with an agency approved by the US Trustee or manually. You can find a list of agencies on the US Trustee’s website.
Meeting With the Creditors
Two weeks after filing, all of your creditors, along with you, will be sent a notice to meet. This will be known as a creditors’ meeting. You will be asked questions about your bankruptcy and all of the papers you filed. All the information you have provided will be cross-checked with you and the creditors present. Don’t worry, as this is not a judgment day. Most of these creditors do not last more than ten to fifteen minutes!
The Chapter 7 Bankruptcy Discharge
This discharge will be the epitome of all of your efforts and the entire process. Once issued, all of your debts will be removed or wiped out by the bankruptcy court except those that can survive bankruptcy like child support, a specific group of tax debts, and student loans. These can be wiped out with a proper court ruling, but it varies from case to case.
Filing for chapter 7 bankruptcy is relatively easy, but you need to qualify for it. The overall process is simple, and only a few forms and meetings are required. At the end of the process, all of your debts are wiped out except those mentioned above and are impervious to bankruptcy unless the court says otherwise.