Chapter 7 bankruptcy is a second chance for individuals in debt to regain charge of their finances. If it seems impossible for you to pay back the amount owed in regular monthly payments, you can file for Chapter 7 bankruptcy.
The bankruptcy court will hear your case and legally discharge you of your debt, including credit card bills, personal loans, and medical bills. However, keep in mind in most cases, the court doesn’t discharge tax debt, student loans, child support, or alimony.
However, as helpful as Chapter 7 bankruptcy sounds for people in debt, the procedure can be long and complex. A Chapter 7 bankruptcy attorney who’s well-versed in the laws regarding the procedure can represent your rights and strengthen your case.
Here’s all you need to know about filing for Chapter 7 bankruptcy.
Qualifying for Chapter 7 Bankruptcy
Not everyone can qualify for Chapter 7 bankruptcy. However, this procedure can work well for people without substantial income and assets. If you own property and earn a modest living but can’t afford to pay back your debt, look into Chapter 13 bankruptcy, as you may be well suited for it.
You may immediately pass the Chapter 7 means test if your gross family income is lower than the threshold. However, if your gross income is higher, expenses would be subtracted from your income to see if the remainder is enough to pay the creditors.
If this amount isn’t sufficient, you may pass the Chapter 7 means test. However, that’s not to say that you’d qualify for Chapter 7 bankruptcy. Here’s the criteria you need to meet for the court to approve the filing:
- You must complete a debt counseling court with an approved counseling agency before filing your request for Chapter 7 bankruptcy. However, you shouldn’t have taken this course 180 days before filing.
- You shouldn’t have filed a Chapter 7 bankruptcy in the last eight years
- You shouldn’t have filed a Chapter 13 bankruptcy in the last six years
- If you had previously filed a Chapter 7 or Chapter 13 bankruptcy, but your case was dismissed, you’re required to wait for at least 181 before making another attempt
Steps to Filing Chapter 7 Bankruptcy
While you can file Chapter 7 bankruptcy on your own, the success of your case will most likely rely on finding an experienced and qualified Chapter 7 bankruptcy attorney. Once you have a reliable Chapter 7 bankruptcy lawyer by your side, you can direct your creditors to the lawyer’s office, and you won’t have to deal with them anymore.
Here are some steps involved in filing for Chapter 7 bankruptcy:
Filling out the paperwork: The process will start with you filling out a series of documents outlining records of your liabilities, expenses, assets, and overall financial health.
Pre-bankruptcy credit counseling: Certified counselors will assess your financial situation to see if there may be other solutions such as debt consolidation, management, or settlement to your predicament.
Filing a petition in court: Once you’ve passed the Chapter 7 bankruptcy means test, your Chapter 7 bankruptcy attorney will file a petition in the local bankruptcy court. The court will assign a trustee to your case whose job is to verify the authenticity of the submitted documents.
Meeting the trustees and creditors: During this meeting with the creditors and trustees, the other parties can decide if they want to pursue the debt you’re trying to discharge. They’re also allowed to ask you any questions they may have about your situation, and you’re required to answer. Your Chapter 7 bankruptcy attorney will be present during the meeting and advise you on how to handle the situation effectively.
Second counseling session: The law requires you to attend a second counseling session on handling debt and personal finances. The purpose of this session is to help you make the most out of this fresh start.
Being discharged of debt: If all goes in your favor, which is likely to happen if you have a bankruptcy lawyer representing you in Florida, you can expect to be discharged of qualified debt after following all the above steps.
Chapter 7 bankruptcy discharge
After the court has discharged your debts and freed you of the legal obligation to repay your debts, your financial situation may not be the best. Besides, the process of filing for bankruptcy can be overwhelming, to say the least.
However, as they say, there’s light at the end of the tunnel. After the court’s orders, the creditors to whom you owed the debt can’t take any collection actions against you. So you can always start on the road back to building wealth.
But keep in mind that there’s a limit to the debt being discharged in a Chapter 7 bankruptcy. Your Chapter 7 bankruptcy lawyer will review any obligations that remain after the court proceedings and will advise you on the next steps to take.
You can rely on your Chapter 7 bankruptcy attorney to have useful insights into the entire procedure so you can avoid common mistakes that DIY filers make. They will help you save the time, money, and effort that you can spend getting back on your feet.
The process of filing a Chapter 7 bankruptcy can be quite complicated for the uninitiated. However, with a reliable Chapter 7 bankruptcy lawyer providing personalized service, advice, and legal representation to you, you can expect a relatively seamless experience.