The Basics Of Bankruptcy And Chapter 7

Bankruptcy and Chapter 7 requires you, as a debtor, to file a petition with the bankruptcy  court in the area where you reside.  Along with the petition, you must file a schedule of your assets and liabilities, a list of your current income and expenses, a statement of your financial affairs and a schedule of executory contracts  and unexpired leases.  You must also provide a tax return or transcripts for the most recent tax year.  As an individual debtor, you must also file a certificate of credit counseling and a copy of any debt repayment plan you received through credit counseling.  You will also be asked for evidence of payment from employers if you received 60 days prior to filing, a monthly statement of net income and any anticipated increase in income or expenses after you have filed your petition. 

You will be charged a fee by the court of $299, which includes a case filing fee of $245 plus a $39 miscellaneous administrative and a $15 trustee surcharge.  These fees must be paid to the court when you file for bankruptcy.  Sometimes you can be approved for a payment plan whereas you pay the fee in four installments over a 120 day period after filing the petition. 

Once you have filed your Chapter 7 petition, most collection actions against you will stop according to the “automatic stay” rule.  This means that your creditors may not initiate or continue lawsuits, garnish your wages or make phone calls to you demanding payment.  That is why it is so important that you list the names and addresses of all your creditors in your petition.  You will be required to attend a meeting of creditors between 20 and 40 days after filing your petition.  You will answer questions under oath regarding your financial affairs and property. 

Bankruptcy and Chapter 7 gives you the opportunity to be released from personal liability for most of your debts.  It also prevents your creditors from taking any collection actions against you.  You will need to consult with a competent legal counsel before filing to make sure that this is your best option.  Generally, as an individual debtor, you will have a 99% chance of having your debts discharged under Chapter 7.