How to File for Chapter 7 Bankruptcy

Three Parts:Getting Ready to FileStarting the Bankruptcy Filing ProcessMaking Sure Your Filing Runs Smoothly

For many people who are completely over their head in debt, filing for bankruptcy can provide relief and a fresh financial start. Most United States citizens are only able to file for either Chapter 7 or Chapter 13 bankruptcy. This article discusses Chapter 7, in which the court settles most of your debts, partially by selling off your unprotected assets and distributing the proceeds to the creditors.[1] Although this process may seem complicated, with proper legal advice or research it is relatively simple to navigate.

Part 1
Getting Ready to File

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    Determine if bankruptcy is the best option for you. Bankruptcy is not something that you should undertake lightly, but you should consider it if you cannot repay your debts and do not foresee any changing circumstances. That said, you do not have to be completely broke to file. Talk with an attorney before you raid your retirement funds and/or refinance your home.
    • The decision to file for bankruptcy should only be made as a last resort, as it comes at a high cost to your future credit. You should check before filing if enough of your debts would be discharged to make the process worth it. Generally, bankruptcy filings are made by people who have excessively high amounts of medical bills, credit card debt, personal loan debt, or auto accident claims debt. These types of debt, among others, are legally dischargeable in Chapter 7 Bankruptcy.[2]
    • Be advised that Chapter 7 bankruptcy will allow the court to seize your assets to meet the demands of creditors. Possessions like your home, retirement fund, public benefits, tools used for work, and certain personal possessions are protected and cannot be seized, but be prepared to let go of expensive items (sports cars, large televisions, high-end jewelry, etc.) and non-necessities during the bankruptcy process. Types of property exempt from seizure vary by state however, so be sure to check your state's relevant laws before deciding to file.[3]
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    Find out if you qualify for Chapter 7 Bankruptcy. This depends on your income, as compared to similarly sized families. Essentially, the courts check to see if you really don't have enough income to pay off your debts.[4] If you don't qualify, you're only option would be a Chapter 13 "debt consolidation".
    • Certain debts are not dischargeable through the Chapter 7 bankruptcy process, such as debt that incurred in bad faith as a result of fraudulent or grossly negligent pre-petition actions as well as certain tax and student loan debt (in most cases).[5] Check to see if your debts are covered under Chapter 7 bankruptcy before filing.
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    Decide whether to hire a bankruptcy attorney. A bankruptcy attorney can help you determine whether Chapter 7 is the best option for you, and can guide you through the entire process. Be advised that hiring an attorney for this process will generally cost you about $1250, with the actual value depending largely on your location and the complexity of your case. [6]
    • Be warned that many attorneys require their fee upfront. This is because the bankruptcy proceedings may discharge outstanding legal fees.
    • Filing without a lawyer is certainly possible and is much cheaper than filing with one. However, you should consider that a good lawyer can help persuade the court to settle more of your debts or better protect your personal property from seizure by the court. Even filing pro se, or without a lawyer, you are still required to pay the $335 Chapter 7 bankruptcy filing fee as well as for pre-filing credit counseling and the personal finance management class, each of which may cost up to $50. Should you decide to file for Chapter 7 bankruptcy without a lawyer, see How to File Chapter 7 Bankruptcy Without a Lawyer.

Part 2
Starting the Bankruptcy Filing Process

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    Complete mandatory credit counseling. As of 2005, the Federal Government requires that debtors receive credit counseling prior to filing for bankruptcy. This will cost between $20.00 and $50.00 but the fee will be waived if you unable to pay.[7] If your case is filed without the credit counseling it will be dismissed before you seek discharge of your pre-petition indebtedness. You can find a list of Bankruptcy Trustee approved agencies through the website.[8]
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    Complete other necessary paperwork. Along with the petition, you will also file a schedule of assets and liabilities, current income and expenditures, all debts to be included in the bankruptcy, executory contracts and unexpired leases, and a schedule of exempt assets, and, under the revised bankruptcy code, a means test, which is used by the trustee to determine possible abuse of the bankruptcy laws. You can find the forms for free online.[9]
    • The list of debtors, account numbers, addresses, and amounts owed should be as complete as possible to avoid problems after the bankruptcy. Creditors who are not notified will attempt to collect despite the bankruptcy.
    • Debts should also include any co-signed liabilities or outstanding guarantees even if loan is in good shape. Otherwise, creditors may seek payment.
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    File a petition, your completed paperwork, and your credit counseling certificate with the bankruptcy court. As the debtor you must file a petition with the bankruptcy court serving the area where you live (or where you own a business or have most of your assets). Once the petition is filed, most legal actions are “stayed", and most of the people you owe (the creditors) will be unable to start or continue lawsuits, garnish wages, or contact you demanding payment. If you did not apply for a fee waiver, the court will require a $335 payment by cash or money order.[10] The filing fee must be paid in full when filing your initial petition; however, some bankruptcy courts allow the filing fee to be paid in installments.

Part 3
Making Sure Your Filing Runs Smoothly

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    Provide your bankruptcy trustee with copy of your most recent paycheck stubs and your most recent tax return. In some cases, you must provide the trustee with these documents at least seven days before your creditors meeting. Check with your appointed trustee or your lawyer (if you have one) to clarify what documents the trustee needs prior to the creditors meeting.[11]
    • The bankruptcy trustee will oversee your filing process and is assigned to you after you file your initial documents. This trustee is not your lawyer or the judge but another official appointed by the court or your creditors to ensure that the bankruptcy process runs smoothly.
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    Attend the meeting of creditors. At least 21 but no more than 40 days after the petition is signed, a meeting of creditors will be held. This meeting can also be called a 341 meeting. You must attend the meeting, and the people you owe will be able to ask you any questions regarding your financial affairs and property. This rarely happens, especially if most of your debt is unsecured (not backed with collateral like your home or car); credit card companies will not send representatives to surround you at a meeting. However, representatives of companies or parties that you owe money to for your house or car may be present.[12]
    • This meeting will be overseen by the Chapter 7 trustee for your case. He or she will instruct you on what to bring to this meeting, but in general you will need the following documents:[13]
      • copies of recorded mortgage documents
      • car titles
      • property deeds
      • bank statements
      • tax returns
      • pay stubs
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    Complete your post-filing Personal Financial Management Instruction Course. You can complete this course only after your case is filed and must do so within 45 days of the creditor's meeting. This is a different course from the credit counseling course you did when you submitted your paperwork. The course can vary in cost from free to about $50. Links to the trustee -approved providers are listed at []. If you do not do this, you risk having your case dismissed. Submit the certificate of completion as instructed in the correspondence to you.
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    File motions or objections as necessary. During the course of your case, there may be claims made against you that you can dispute. For example, a car loan creditor may claim a larger number owed than your submitted documents display. This will have to be cleared up using proper legal procedure. So, once again, it is advisable to seek professional legal advice for this type of action. Keep in mind that you will only be able to make these sorts of motions while your case is open; don't wait until after it has already closed.
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    Wait for final correspondence saying your debts are discharged. After all objections and motions are resolved, your case will be legally processed and your creditors will receive notice of your (hopefully) successful bankruptcy filing. This will be a minimum of 61 days after your Meeting of Creditors.
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    Get yourself back on track! At the conclusion of the chapter 7 bankruptcy process, you are discharged. You are no longer liable for discharged debts, and creditors cannot take any action against you. You are now ready to start rebuilding your credit!
    • Even though all debts are discharged, certain debts may be "reinstated" due to creditor pressure. If a debt is reinstated, it is not discharged, but rather continues under the same terms as before the bankruptcy proceedings.[14]


  • If you choose to represent yourself in filing a Chapter 7 bankruptcy, it is vital that you familiarize yourself with the procedures and rules of the local Bankruptcy Court District, as well as bankruptcy rules and exemptions for your state.
  • If you are unable to afford legal counsel for your bankruptcy case, you may be eligible to receive free legal services.[15]


  • Be advised that any creditors or debts not include on the paperwork filed with the court will be exempt from the bankruptcy filing. That is, they will still be able to seek recompense for your debts enough after this process is complete. Be sure that you and your lawyer (if you have one) are sure that you have includes all relevant debts and creditors before filing.
  • It is possible that the trustee will determine that your case doesn't qualify for a Chapter 7 bankruptcy; the trustee can recommend the Chapter 7 case be converted to a Chapter 13 bankruptcy, which means you will have to make payments to the trustee to repay debt.
  • If your Chapter 13 bankruptcy case is dismissed voluntarily and the automatic stay was modified previously by a creditor, you must wait 6 months before filing Chapter 13 again.

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Categories: Bankruptcy