Today I’m going to discuss specifically about Chapter 7 bankruptcy information and what you need to know. This is the chapter that most people would probably like to file under, since it will wipe your slate clean so to speak of all debt. Chapter 7 is also called “Liquidation” because your assets will be liquidated, or sold, to pay your debt. For secured debt, like cars or home loans, your asset will probably go back to the lender as it would if it were repossessed or foreclosed.

Chapter 7 is the way to get a fresh start. You discharge your debt, well most of them as you’ll see below there are some exceptions. But basically most of your debt can be gotten rid of, and you now have fewer or no monthly debt payments to make at all. Your credit after bankruptcy will be worse of course but more on that later.

The process starts with you deciding to file bankruptcy. This is not always an easy decision, and in not every case should you file. If you think you can work out repayment plans with your creditors, you might be better of not to declare bankruptcy. But let’s say you’ve decided to go ahead. Before you can file, you have to take a credit counseling course from an approved counseling agency within the six months before filing. This is also true of Chapter 13 bankruptcy.

With Chapter 7, you will also have to pass a “means test” which determines whether you are making enough money form a regular job to be moved into Chapter 13 bankruptcy instead. If you have no regular income, you are likely to be able to file Chapter 7. But, with regular income, which allows you to pay at least some of your debt, you will be moved into Chapter 13. This was done in 2005 as a result of the new bankruptcy laws.

Before you file, you should be aware that some debts cannot be discharged, or eliminated, in bankruptcy. These include student loan debt, delinquent taxes, and child or spousal support. So, if the bulk of your debt burden is made up of these types of debt, you may want to reconsider your decision to file personal bankruptcy.

The process can be complicated, and it’s recommended you use an attorney to file. For starters, the courts charge a $245 case filing fee, a $39 miscellaneous administrative fee, and a $15 trustee surcharge. Also, your lawyer will charge a significant fee, which can start at about $2,000 and up.

There are a lot of forms you have to complete for Chapter 7, which list all of your income, assets, and debts. Some of the Chapter 7 information the court requires are:

1. A list of your creditors with the amount of their claims;
2. Your income, including you job and how much you make, and how often you are paid;
3. A list of all of your property; and
4. A detailed list of your monthly living expenses, such as food, clothing, shelter, utilities, transportation, medicine, etc.

Your lawyer will help you prepare a list of exempt property, which means property you get to keep. In some states this includes your home, but only in a few – it’s a common misconception that you can always keep your home.

Once you file, your bankruptcy case will stop, or “stay” all creditors from coming after you, either with calls or with legal action, however sometimes this stay lasts for a limited time. Some proceedings like garnishment may continue.
After about a month, there will be a meeting of the creditors, where you may be asked some questions. Other than that, you will not be likely to have to appear in bankruptcy court in front of the judge. Usually, the creditors do not show up, but you will have to answer some questions on the record.

It can take only a few months for your bankruptcy Chapter 7 filing to be completed. Once all the forms and meetings have taken place, your debt will be discharged, which means it is basically eliminated. This of course excludes any of the debts listed above that are not subject to discharge.