Chapter Seven Bankruptcy

How to File For a Chapter Seven Bankruptcy

I will like to know the steps in filing Chapter 7 bankruptcy.

Desmond

---

I am retired and no longer licensed to practice law. I was never licensed in the state you live in and am not familiar with specific bankruptcy laws your state may have enacted.

I will give you a general outline of how to file for a Chapter Seven bankruptcy. I urge you to consult with a lawyer rather than doing this yourself. Read Bankruptcy Lawyers for more information about your need for counsel.

The following information is general in nature and not specific to your state and it cannot be construed as legal advice.

As of October 2005, the debtor must first undergo a mandatory credit counseling session. It costs $50 and lasts 90 minutes. The counselor will tell you if you can file under Chapter Seven or not.

A Chapter Seven case begins when the debtor (you) files a petition with the bankruptcy court serving the area where you live. Official bankruptcy forms can be purchased at a legal stationery store. The court will not supply them.

In addition to the Chapter Seven petition, you also are required to file several schedules of your assets and liabilities: a schedule of your current income and expenditures; a statement of your financial affairs; and a schedule of contracts, such as mortgages and car loans, and unexpired leases you may have entered into.

A husband and wife may file a joint Chapter Seven petition or individual petitions. One or the other can file on their own with the other spouse staying out of bankruptcy.

To complete the bankruptcy forms you will need to compile the following information:

• 1. A list of all creditors and the amount and nature of their claims;
• 2. The source, amount, and frequency of your income;
• 3. A list of all your property;
• 4. A detailed list of the your monthly living expenses; food, clothing, shelter, utilities, taxes, transportation, medicine, etc.

[Bankruptcy Reform has expanded this list. See a lawyer for advice.]

You will be charged a filing fee of $155, a $39 miscellaneous administrative fee, and a $15 trustee surcharge, totaling $200. The fees should be paid to the clerk of the court when you file your paperwork or you may, with the court’s permission, pay them in up to 4 installments. The final installment must be paid no later than 120 days after filing the petition, unless you get the court’s permission to extend it to 180 days

The administrative fee and the trustee surcharge may be paid in installments as well.

If you file a joint petition with your wife you will be charged only one set of fees.

If you fail to pay these fees, the court may dismiss your case.

The filing of a Chapter Seven petition will automatically stay most actions against you or your property. This stay arises by operation of law and requires no action on your part. Your creditors will receive a notice of the filing of the petition from the clerk of the court.

As long as the stay is in effect, your creditors cannot start or continue any lawsuits, wage garnishments, or even telephone calls demanding payment.

One of the schedules that you will have to file is a schedule of exempt property. This is one reason you really need a competent bankruptcy lawyer. He will be familiar with the Federal exemptions, as well as your state’s exemptions, and will help you choose the right set to use. The Federal exemptions for a Chapter Seven case are listed in Chapter Seven Bankruptcy.

A meeting of creditors is normally held 20 to 40 days after the petition is filed. You must attend this meeting. The trustee will be there and run the show. Your creditors may appear and ask you questions regarding your financial affairs and property. If a husband and wife filed a joint petition, they both must attend the creditors’ meeting.

You have to cooperate with the trustee. If you get caught trying to hide assets, if you transferred property illegally before filing or otherwise fail to cooperate with the trustee and to provide the financial records or documents that the trustee requests, your case can be dismissed. If you ran up debt just before filing, generally within 90 days, it will likely not be discharged.

Bankruptcy reform extended the list of recently acquired debts that cannot be discharged and it now includes expenditures for luxury goods as well as extends the amount of time you have had to own your home to qualify for a "homestead" exemption in states that allow them.

The trustee is required to question you at the meeting of creditors to ensure that you are aware of the potential consequences of seeking a Chapter Seven discharge in bankruptcy, including the effect on your credit history, the ability to file a petition under a different chapter, the effect of receiving a discharge, and the effect of reaffirming a debt. Some trustees may provide booklets covering this information before the meeting so you are aware of the consequences of bankruptcy.

The trustee is also likely to give you a lecture on financial responsibility.

You can convert a Chapter Seven case to a Chapter Thirteen case if you meet the eligibility standards and haven’t converted before. You can’t convert the case repeatedly from one chapter to another.

If you have any non-exempt assets, the trustee will sell them and apply the proceeds to pay off some of your debt. Most cases are classified no asset and proceed rapidly.

Unless an objection is raised by a creditor, you should receive a discharge 60 – 90 days after the meeting of creditors. You will probably not have to appear in court.

Discharge is granted in most cases where there are no objections raised by creditors, but it can be set aside if the trustee or a creditor proves you committed perjury or other prohibited acts.

Read Bankruptcy to see which debts cannot be discharged in a Chapter Seven bankruptcy.

That’s the procedure in a nutshell. If you have property you want to protect or if you need any questions answered, call your local bar association's Lawyer Referral Service. They will give you the names of two or three qualified bankruptcy attorneys in your area. These attorneys will usually provide you with a free consultation. The Referral Service will tell you the terms.

I urge you to hire an attorney. This is not something you should do on your own. For a consultation with a local bankruptcy attorney, click here.

Read Bankruptcy Reform for more information on how the procedure has changed.

  | Top | Questions | Home |