Once you get to the point that you cannot pay your day-to-day living expenses without using credit, you may need some debt relief. Chapter 7 bankruptcy is a common method of getting rid of debt. Don't feel intimidated by the process — read on and learn how Chapter 7 bankruptcy works.
How Much Time Does It Take?
Chapter 7 bankruptcies are usually quick and easy. Chapter 13 and other types of filings, however, can take years to be over with. As long as nothing unusual happens during your bankruptcy process, it will probably take anywhere from four to six months depending on the case backlog in your local federal bankruptcy court. The process begins with visiting a bankruptcy lawyer.
Visit An Attorney
Before you file for bankruptcy, you must complete a credit counseling class. Once you provide proof of completing that class to your lawyer, gather the required documentation and fill out the paperwork. While your lawyer will complete the official forms and file them for you, most lawyers give you some forms of their own to fill out. Have at the ready:
- Income from jobs and all other sources
- List of everyone you owe money to along with balances, account numbers, names, and addresses
- List of assets like your home and car
- Past income tax returns
The Automatic Stay Kicks In
Once your lawyer files the bankruptcy package, you are immediately protected from any creditor actions like foreclosures, repossessions, contact, wage garnishment, and court judgments.
The Creditor's Meeting
This meeting takes place a few weeks after your filing. Your attorney will also attend, and there are several routine and common questions to be answered during this short and usually uneventful meeting. Once the trustee who is overseeing your bankruptcy approves, your bankruptcy is now well on its way to be complete.
Exempt and Nonexempt Property
If your property exceeds your state's exemptions, you will arrange to relinquish it to the trustee. State exemptions almost always allow you to keep some of your property, though. If you wish to reaffirm a debt, you can keep that property and continue making payments on it.
One More Class
Before your bankruptcy can be over, you must take another class. This class is meant to educate the filer about moving forward from bankruptcy and making better financial decisions in the future.
Final Discharge
You will be informed via a letter from the US Bankruptcy Courts that your discharge is final. Your bankruptcy is over and your case is closed. Speak to a bankruptcy law attorney to find out more.
