What is Chapter 7 Bankruptcy?

Chapter 7 Bankruptcy or liquidation bankruptcy is a type of bankruptcy that can clear away many types of unsecured debts (such as Credit Cards). Under this type of bankruptcy, you can eliminate most of your unsecured debts and some secured debts by surrendering your non-exempt assets.  Most people that file for Chapter 7 bankruptcy have no assets to liquidate or have exempt assets and obtain approval to no longer pay their debts.  If you are far behind on your bills and do not have the means to afford monthly payments and living expenses Chapter 7 bankruptcy could the right legal tool.  To qualify for Chapter 7 Bankruptcy, the debtor must meet a certain income criterion to qualify.  This income criteria are determined by what is called the means test.  The means test compares your household income with the median income for your state, and it compares your expenses to IRS Local Standards.  If you qualify, you can proceed to file for Chapter 7 Bankruptcy.

How to file for Chapter 7 Bankruptcy?

During our first meeting we will go over your situation and decide if you qualify to file for Chapter 7 Bankruptcy.  We will review your financial information, credit reports, taxes, paystubs, bills, and collections matters.   Once we decided to proceed with filing for Chapter 7, you will be required to take a Credit counseling course before we file the bankruptcy petition with the court. This credit counseling course can be taken online or over the phone. The credit counseling provider will give you a certificate of completion which will be attached to your bankruptcy petition. 

The filing of the Chapter 7 Bankruptcy petition will trigger the Automatic Stay. This protects you from foreclosure, lawsuits, garnishments, and other creditor actions. Protection begins from the time of filing and continues until you obtain the final discharge order. The court will schedule a meeting a 341 hearing. During this meeting we will meet with the bankruptcy trustee.  The trustee will review your petition and submissions.  During this time, you will be required to take a second mandatory course called financial management.  This course will be filed with court and it must be completed prior the scheduled discharge order.   If all requirements are completed, you will obtain an order discharging your debts.  The discharge prevents creditors from attempting to collect any debt against you personally if it arose prior to the filing of the bankruptcy.  Some debts, including certain taxes and child or spousal support obligations, are not dischargeable and they will survive the Chapter 7 proceedings.  In many cases, from the initial meeting to the end of the case, the process can last 3 to 4 months base on the ability of the debtor to provide the required documentation.

What happens if I do not qualify for Chapter 7 Bankruptcy?

There are many reasons a debtor does not qualify for Chapter 7 bankruptcy.  Most people that do not qualify are either over income or over asset.  If you do not qualify, you can still do a Chapter 13 bankruptcy, or we can work with your debtors to settle your debt directly.  Both options could provide you with the financial relief you need and help you obtain a fresh start.

I want to file for Chapter 7 bankruptcy what should I do?

Give us a call at (201) 880-5563 to set up an appoint or you can send us an email by filing the contact form below.   Our office provides in-person and virtual meetings and we can arrange a meeting at a time of your convenience.