Chapter 7 bankruptcy can be filed by individuals or married couples (called a “consumer” Chapter 7 bankruptcy) or businesses (called a “business” Chapter 7 bankruptcy). A Chapter 7 bankruptcy typically takes about six months to completely close.
A chapter 7 case begins by filing a petition with the bankruptcy court serving the area where you live. In addition to the petition, you must also file various schedules and sworn statements. A husband and wife may file a joint petition or individual petitions. Even if filing jointly, a husband and wife must both file all the documents required of eligible individual debtors.
If you have secured debts such as a mortgage or vehicle that you wish to retain, they will go through the Chapter 7. You will sign what is called a “Reaffirmation Agreement” which in simple terms means you sign back up for the debt. If you have unsecured debts such as credit cards, medical bills, payday loans, etc a Chapter 7 will wipe out these debts. If you are facing garnishment, a Chapter 7 will stop such creditor actions.
The Chapter 7 filing fee is $335. This fee must be paid to the clerk of the court upon filing unless the court specifically allows you to pay in installments.
In order to complete the Official Bankruptcy Forms that make up the petition, statement of financial affairs, and schedules, you must provide the following information:
- A list of all creditors and the amount and nature of their claims;
- The source, amount, and frequency of the debtor’s income;
- A list of all of the debtor’s property; and
- A detailed list of the debtor’s monthly living expenses, i.e., food, clothing, shelter, utilities, taxes, transportation, medicine, etc.
Married individuals must gather this information for their spouse regardless of whether they are filing a joint petition, separate individual petitions, or even if only one spouse is filing. In a situation where only one spouse files, the income and expenses of the non-filing spouse is required so that the court, the trustee, and creditors can evaluate the household’s complete financial position.THE MEETING OF CREDITORS
Between 21 and 40 days after the petition is filed, the case trustee will hold a meeting of creditors. During this meeting, the trustee puts the debtor under oath, and both the trustee and creditors may ask questions. You must attend the meeting and answer questions regarding your financial affairs and property. If a husband and wife have filed a joint petition, they both must attend the creditors’ meeting and answer questions. It is important to cooperate with the trustee and to provide any financial records or documents that the trustee requests. Your attorney will appear with you at this meeting and help you through this procedure.THE CHAPTER 7 DISCHARGE
A discharge releases you from personal liability for most debts and prevents creditors from taking any collection actions against you forever. Because there are many exceptions to a Chapter 7 discharge, debtors should consult a competent bankruptcy attorney to discuss the scope of the discharge before they file. Generally, ninety-nine percent of debtors receive a discharge in chapter 7 cases. In most cases, unless someone files a complaint objecting to the discharge or a motion to extend the time to object, the bankruptcy court will issue a discharge order in about 60 to 90 days after the date first set for the meeting of creditors.Other information available on the following sub-pages: