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Filing for Chapter 7 Total Bankruptcy is something that many people hope they never have to do. While it’s something that should only be done as an absolute last resort, if done wisely this could be a fresh start for many people struggling with debt. Chapter 7 Bankruptcy allows you to cut most if not all of your debt. It’s important to get help from an experienced bankruptcy attorney.
Get Credit Counseling
Even those who are just thinking about filing for bankruptcy must go though and complete a course on credit counseling. It’s required to complete the course through an agency that’s approved by the government six months before you file for Chapter 7 bankruptcy protection. Upon completion of the course, the court will present you with a certificate. Your final requirement is taking another session where you will learn about financial management.
The Bankruptcy Means Test
You’re required to take a means test, also called the Chapter 7 test, before doing anything. This test is going to figure out whether you’re eligible for filing for Chapter 7 bankruptcy. The means test will decide what your debt-to-income ratio is, which means they’re going to compare how much debt you’re in to how much money you’re making.
They will then take your income and compare it to what the medium income is for your state with the same size family. So if you’re family size is five, they will compare that income with the median income of a family size of five. It’s required that your income is equal to or less than the median income to qualify for Chapter 7 bankruptcy protection.
File your Documents
Once you’ve completed the credit counseling courses and passed your means test, it’s time to file your petition through a court that deals with bankruptcy. This is where it’s recommended to have a bankruptcy attorney to make sure your paperwork gets filed correctly.
Once the petition gets filed, the court clerk will send out notifications to your creditors informing them about your Chapter 7 bankruptcy petition.
Attending 341 Meeting
You’re also required to attend a 341 meeting three to six weeks after you’ve filed your bankruptcy petition. The 341 meeting is a meeting that takes place at the court with your creditors. In most cases your creditors won’t show up; it’s just you and the trustee the court assigned to your case. You’ll answer questions under oath about your liabilities and assets. The meeting is fairly short and shouldn’t take more than an hour.
Your Debts are Discharged
After the 341 meeting, your trustee will take care of selling off all your non-exempt assets as a form of payment to your creditors. All your creditors should have filed their claims with the court by this time. You are then discharged of your debts, which doesn’t count towards student loans, and your debts are now gone.