What You Need to Know About Chapter 7 Bankruptcy and Its Laws

Bankruptcy is a complicated process but just like with anything, if you take a step back and look at it as a step-by-step process then the complicatedness will quickly dissolve. Chapter 7 bankruptcy involves a trustee selling off all the debtor’s nonexempt assets and distributing payment to the debtor’s various creditors. But what are the nuts and bolts of the process? How does it start and end?

Filing Chapter 7 Bankruptcy


•    Gather all the necessary information. Complete information on your creditors and their names, contact info, and amount of debt owed; your income and its source, frequency, and amount; a complete list of your property as well as a list detailing your cost of living.

•    File a petition. It is strongly recommended you retain a licensed bankruptcy attorney at this point. He or she will assist you in filling out your petition with the court for filing Chapter 7 bankruptcy. Before filing you will have to undergo a “means test” which will determine your eligibility for filing Chapter 7 bankruptcy.

•    Automatic stay. This is good news for the debtor because it is basically the court telling all the creditors to “back off.” Creditors are notified that bankruptcy has been filed and they are no longer allowed to contact the debtor regarding collection payments.

•    The 341 Meeting. This meeting is an opportunity for any of your creditors to voice any objection they may have regarding your bankruptcy and the exempt assets you included. Chances are no creditors will bother showing up if they can’t realistically get 50 cents on the dollar owed to them.

•    Liquidation. The petition is approved and the court-appointed trustee sells off all applicable nonexempt assets.

•    Discharge. You are contacted via mail within 90 days whether or not you’ve been granted a discharge on your remaining loans. This means you are no longer legally obligated to pay off the loans. Remember that you’re not eligible for discharge on certain loans like alimony, child support, student loans, etc. You will still be responsible for paying these off after your bankruptcy.

•    Rebuild your credit. Once the legal process of the bankruptcy has run its course it is now time to start the arduous, years-long task of rebuilding your credit to a respectable rating. The financial management course required should help you in building a plan to accomplish this goal.

Get Started Today


Contact a licensed bankruptcy attorney today and go over your case with them. From there you’ll have a good idea of whether or not bankruptcy is the course of action most appropriate for you and, if so, which type of bankruptcy.

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