What happens when you file for chapter 7 bankruptcy?

Chapter 7 bankruptcy is common when people can't pay off there debt. The process might take a few months to complete, but is really straight forward. After filling out various forms and applications, the courts appoint a trustee who gather all your belongings (assets of value), sells them, and then distribute the money from the sale accordingly to your creditors. This type of bankruptcy will wipe off most of your debt, but some of your debts might still get passed through being that there are items that might not be discharged, such as a car loan, and of coarse any debt that might have been acquired with the intent to defraud a creditor. Any debts still owed will there after be sold to a collection agency, and it will just be a matter of time before you start getting those pesky calls around dinner time.

Chapter 7 bankruptcy requirements

Before qualifying for chapter 7 bankruptcy you must meet a few requirement’s, most of this has to do with your house hold income measured against what the state considers the median income for the seize of your family, and your ability to repay your debt within the period of five years (This is called, “the mean test”). This qualification test is also done to see if you should be filing for chapter-7, or chapter-13 bankruptcy. If it is affirmed that your income is less or equal to the median then you shouldn’t have any problems meeting chapter 7 bankruptcy requirements.

What you need to disclose when you file your bankruptcy petition

When you are filling out the numerous forms that come with bankruptcy you will be asked to disclose all your debts and assets, such as your credit cards, home, automobile, boat, or any land. The petition for chapter 7 bankruptcy must include your complete financial situation, if you forget to include a debt it may not get discharged, and the debt may come back to haunt you at a later time. If you don’t disclose an asset, it may look as if you are trying to defraud the courts, and that’s not a situation you would like to be in at this junction in your life.

How much Chapter 7 bankruptcy will cost to file

The fee’s for filing for bankruptcy will run up $300 for an individual, and as much as $1,800 for a couple. If the amount is out of your budget, you can request permission from the courts to make the payments in installments. All payments are made out to the courts, and paid to the court clerk at time of filing. If you choose to make payments by installment be sure to get your payments in on time, failure to do so may get your case dismissed by the courts. Getting yourself a lawyer at this point is a good idea, if you cant afford a lawyer than look for a free one either in your yellow pages or online.

What to expect after you file for bankruptcy

Although the creditors will stop hounding you after filing for bankruptcy you’re not out of the woods just yet. A meeting with the court appointed trustee and your creditors will take place a couple of months after your initial filing. A full review of your disclosed assets and debt's will be done at this time. The debt will get broken down into two categories, dischargeable, and non-dischargeable. All dischargeable debt will be weighed against your assets to conclude what non-exempt property should be sold. Once your assets get sold off for cash, the money collected by the trustee will be distributed amongst your creditors.

What you get to keep after chapter 7 bankruptcy

Are there any assets you would like to keep after bankruptcy? Well first off the trustee is only allowed to sell your non-exempt property. Property, that’s declared exempt, will still belong to you after your bankruptcy is complete. Exempt property can either fall under state, or federal list of exempt property. It is up to you to choose and file under which will let you keep the highest amount. Any retirement, life insurance plan, social security, or 401k are considered exempt, but you should check with your state because they might differ on things such as IRA’s. Another way to keep some of your possessions after bankruptcy is to reaffirm your debt. This is where you come into an agreement with the creditor to either to completely, or partially pay off the remaining debt of an item. A good reason for reaffirmation could be the necessity of a second household car, but it is really up to you to decide what you hold to vale and cant live with out.

Even after after you are declared bankrupt you might still owe money

After all the court proceedings occur you may still have debt in your hands. The debt that you must still pay of is the debt the courts considered as non-dischargeable. Such debt could include your automobile, student loans, and FHA loans, loans from non-profit, government fines, child support, alimony, and taxes. Secured debt, or debt acquired from getting into trouble with the law will also be non-dischargeable. Always be sure to check with the state or an attorney on current bankruptcy proceedings.

For further information on chapter 7bankruptcy try www.uscourts.gov