In these tough economic times, many are faced with the difficult decision of filing for bankruptcy. Chapter 7 bankruptcy is one option that offers relief to those in debt by eliminating unsecured debts, like outstanding credit card bills. This particular type of bankruptcy, known as liquidation, is meant for those individuals, partners, or businesses that are unable to repay their debt. In consultation with a bankruptcy attorney, those wishing to file for Chapter 7 bankruptcy can follow these six steps:
1. Organize your documents
In consultation with your bankruptcy lawyer, organize the documents identifying your creditors, their contact information, and the amount due to each. You will also need documentation regarding your income. Your attorney can give you advice regarding which debts you can liquidate and which you will need to pay off, like student loan debts. Your bankruptcy lawyer will also be able to guide you through the necessary steps if you wish to keep some property, like your home or car.
2. Attend Credit Counseling
Once you’ve organized your documentation, you’ll need to attend a credit counseling course. This course can be completed at any number of approved locations, as well as on-line. You will need to submit your credit counseling certificate when you apply for bankruptcy. Your bankruptcy lawyer can help you identify an approved credit counseling course. You’ll receive a certificate upon completion of the course.
3. File for Bankruptcy
After completing the course, you will submit your documentation to the bankruptcy court for approval. Once approved, you will receive a case number identifying your petition. From this point forward, all creditors should work directly with your bankruptcy attorney. You are now protected against further action by creditors, including wage garnishment, home foreclosure, or repossession of property.
4. Complete a Financial Management Course
Once your bankruptcy petition has been approved, you will need to complete a financial management course. This is an important step toward rebuilding your financial future and avoiding the need to apply for bankruptcy again. It is important that the course you choose be one of those approved by the U.S. Trustee’s Office. Your attorney can help you select the appropriate course. As with the credit counseling course, you’ll be awarded a certificate upon completion. You’ll need this certificate for the meeting with your creditors, the next phase of Chapter 7 bankruptcy.
5. Meet with your Creditors
During the fifth phase, your lawyer will set up a meeting with your creditors and the U.S. Trustee assigned to monitor your case. This meeting is often referred to as the 341 Meeting of Creditors, and will occur roughly 30 days after you file your case with the bankruptcy court. During this meeting, you’ll be interviewed by the U.S. Trustee who will review your photo identification, financial records, and documentation of any income earned since you filed your case. Your creditors will also be invited to ask you questions.
6. Debt Discharge and Rebuilding your Credit
Following this meeting, there is a 60 day period during which your creditors or the U.S. Trustee may object to any part of the bankruptcy plan, including the petition itself, the schedule, or any of the supporting documentation you submitted. If there are no objections, your debt should be liquidated shortly after this 60 day waiting period. Be sure to review your credit report following the discharge in order to confirm that the debt discharge has been noted. This allows you to start over financially. You can then begin putting aside money for emergencies, and work on improving your credit rating. You might start out by securing a credit card and paying promptly so that eventually you can secure a car and home loans. With the knowledge you’ve obtained during the required financial management course, you’ll be able to work on making financially responsible decisions and fully recovering from bankruptcy.
The decision to file for Chapter 7 bankruptcy can be a difficult one. However, it is an option that offers those in debt the opportunity to make a fresh start. The courses required as part of filing for Chapter 7 bankruptcy are an essential part of getting back on the right track toward financial independence and a strong credit rating.