Chapter 7 Bankruptcy Information

If you are in major debt and considering bankruptcy please read more about Chapter 7 Bankruptcy Information here...

If you are in major debt and you have tried everything to ease the situation but nothing works; the only option left is filing for bankruptcy. In case you are a private debtor which means that your debts have arisen out of your personal activities and are not business related, you can either file for Chapter 7 bankruptcy or Chapter 13 bankruptcy.

Attorneys will usually recommend the former because the application process is faster and the complexities involved are limited. This is because while you will take a few months to file Chapter 7, the program that comes with Chapter 13 can end only after 5 years.

Once you have decided to file for Chapter 7 bankruptcy, you should keep in mind that the court will not allow you to use your credit cards as they will be liquidated. The court will then compare your cost of living to your monthly or annual income and if there is a significant difference, the money that you owe will be extracted out of this amount so calculated. It will then be divided among the various creditors as per the requirements.

In case you are still in debt after the payment period ends, you will have to file for Chapter 13 bankruptcy.

As has already been mentioned, the process that you have to go through when filing for Chapter 7 bankruptcy is quite straightforward. The first thing you will need to do is determine whether you are eligible for self filing. For this, a test will be carried out and the end results will convince the court that you are capable of going through the entire process without an attorney. This ‘means test’ will basically scrutinize the details of your financial situation and the court will make a decision accordingly.

The next step is getting together legal documents and other paperwork. If you have decided to go ahead without an attorney, you should take the assistance of an online service in order to understand what documents you need to submit and why. It is recommended that you take help during this stage because the forms are slightly complicated. This is why it becomes imperative to hire an attorney as it will be his job to make sure that all problems are kept at bay.

You will be required to collect all your financial information in one place and you will have to be very careful because a single mistake can delay the entire process unnecessarily. Therefore, each and every creditor should be contacted and credit counseling should not be ignored. You will be asked to sit through a few sessions which will include question answer sessions based on the details given by you.

The last step is submitting this paperwork to the local court along with a fee. During the next 30 days, the creditors will get in touch with you after which a debtor education session will be carried out. Once this stage is over, all you need to do is wait for a letter which will inform you that you are debt free.