1) Estimate Bankruptcy Qualification and Get Free Local Attorney Evaluation
If you're considering filing for Chapter 7 bankruptcy, it's important to determine if you qualify. Luckily, we've created a bankruptcy calculator that can help you simulate the means-testing bankruptcy forms. You can access the calculator by visiting this link.
Additionally, it's a good idea to receive a free evaluation from a local attorney. However, it's important to note that attorney competency can vary greatly. To help you find a reputable attorney, we've identified the top 5 things we look for in the bankruptcy attorneys we work with. These include: 1) Referral 2) Reviews 3) Relevancy 4) Rates 5) Reliability.
2) Understand Attorney Fee and Costs
If you're struggling with debt, bankruptcy may seem like a daunting but necessary option. One concern is the cost of hiring a bankruptcy attorney. But the good news is that many attorneys offer payment plans to help make it more affordable.
Our article on bankruptcy lawyer fees provides a deeper understanding of how costs are determined. Generally, attorney fees are based on several factors:
- The type of bankruptcy case (Chapter 7 or Chapter 13)
- The complexity of the case
- Your location
- The level of experience of the attorney
- The attorney's expertise in bankruptcy law
However, it's important to note that some attorneys may also take into account your ability to pay and financial need. In addition to attorney fees, you'll also need to pay filing fees, which typically range from $300 to $400 for Chapter 7.
Don't let the cost of bankruptcy deter you from seeking the help you need. Many attorneys are willing to work with you to come up with a payment plan that fits your budget.
3) Chapter 7 Bankruptcy Process
If you're facing a financial hardship and considering bankruptcy, it can be a stressful time. Understanding the bankruptcy process and fees charged by attorneys can add to the anxiety. But don't worry, we're here to help simplify the Chapter 7 bankruptcy process for you. Compared to Chapter 11 and Chapter 13 bankruptcy, Chapter 7 is generally more straightforward.
Chapter 7 bankruptcy is also known as "liquidation bankruptcy," where a trustee is appointed to sell your non-exempt assets to pay off your debts. However, many assets are protected by state and federal law, so you may not lose everything. The process typically takes four to six months to complete, and you'll need to attend a meeting with your creditors and the trustee.
It's essential to have an experienced bankruptcy attorney to guide you through the process and represent you in court. Attorney fees can vary, but they typically range from $1,500 to $3,500. While it may seem like a lot, it's a worthwhile investment to ensure a successful bankruptcy process and a fresh start financially.
Before we begin
Are you struggling with debt and considering bankruptcy? It can be a confusing and overwhelming process, but we're here to help. Our "step by step" bankruptcy decisioning platform has assisted thousands of people in determining whether Chapter 7 bankruptcy, Chapter 13 bankruptcy, debt settlement, or debt management is the right solution for them.
If you're specifically interested in Chapter 7 bankruptcy, our platform can guide you through the process and provide valuable information such as the costs of filing bankruptcy and how to find a bankruptcy attorney. Access to the platform is completely free and can be found below.
Get Free Bankruptcy Decisioning Portal
Now, let's walk through the steps involved in Chapter 7 bankruptcy so you can have a better understanding of how it all works.
Step 1: Do you Qualify for a Chapter 7 bankruptcy
If you're thinking about filing for Chapter 7 bankruptcy, the first step is to determine if you're eligible. Unlike Chapter 13, you must pass a means test to qualify for Chapter 7. Don't worry, though - we've got you covered with our handy Chapter 7 calculator, which can help you estimate your eligibility. Check it out here.
Step 2: Decide whether you will file a Chapter 7 bankruptcy
If you're eligible for Chapter 7 bankruptcy, the next step is to decide whether to proceed with it or consider other options. To make an informed decision, it's essential to weigh the bankruptcy pros and cons. You can find a comprehensive list of these pros and cons here.
Here are the primary alternatives to Chapter 7 bankruptcy:
- Debt Settlement: This involves negotiating with creditors to pay off your debts for less than what you owe.
- Debt Management: This involves working with a credit counseling agency to create a debt management plan that helps you pay off your debts over time.
- Chapter 13 Bankruptcy: This is a reorganization bankruptcy that allows you to keep your assets while repaying your debts over three to five years.
- Debt Payoff Planning: This involves creating a personalized plan to pay off your debts on your own, without the help of a debt settlement or management company.
Step 3: Decide whether to hire an attorney
Thinking about filing for bankruptcy but not sure where to start? Chapter 7 bankruptcy may be a good option for you. It's typically less complicated than Chapter 13 and can be done without an attorney, although it's important to understand the process before making a decision.
If you do decide to hire an attorney, it's crucial to choose a reputable one and understand the associated costs. We recommend checking out our guide to selecting an attorney and using it to find someone who can help you navigate the bankruptcy process.
On the other hand, if you decide to go it alone, NOLO offers a helpful how-to guide for filing Chapter 7 bankruptcy without an attorney. It's also a good idea to read the US Government's post on filing without an attorney to ensure you're fully informed before taking that route.
Step 4: Get a mandatory Credit Counseling Course
If you're considering filing for Chapter 7 bankruptcy, there are a couple of things you need to know. Two mandatory credit counseling courses are required before you can complete the process. The first course, called pre-bankruptcy credit counseling, helps you understand your financial situation and explore alternatives to bankruptcy. You can take this course online or over the phone, and it usually takes about an hour to complete.
The second course is called pre-discharge debtor education. This course is designed to help you manage your finances after bankruptcy. It covers topics like budgeting, money management, and credit repair. You can take this course online or in person, and it usually takes about two hours to complete.
While these courses may seem like a hassle, they can actually be quite beneficial. They help you understand your financial situation better and give you the tools you need to make better financial decisions in the future. Plus, completing these courses is required by law, so it's important to take them seriously.
Step 5: File Petition and Other Forms
Starting the bankruptcy process requires several forms that must be completed. These bankruptcy forms are necessary to file the petition. The petition is composed of the financial affairs and schedules, which include:
- A list of all creditors and the amounts of their claims
- The amount and frequency of your income sources
- A detailed list of all the property you own
- A detailed list of your monthly living expenses
Completing these forms is crucial to ensure that your bankruptcy case is filed correctly. It can be a challenging process, but it is important to provide accurate information to the court.
Step 6: Trustee is assigned to the case
When you file for Chapter 7 bankruptcy, a trustee is assigned to your case to review your paperwork and assess any nonexempt property you may have. This trustee is an impartial party appointed by the court to oversee the process and ensure that everything is done fairly.
To assist the trustee in their review, you may be required to submit certain forms such as a recent tax return. If you do have nonexempt property, the trustee may take charge of managing the sale and liquidation of that property. This is done to help pay off your debts and provide some relief for your financial situation.
While the idea of a trustee managing the sale of your property may seem daunting, it's important to remember that they are there to help you through the bankruptcy process. By working with the trustee and following their guidance, you can navigate this difficult time and come out on the other side with a fresh start.
Step 7: The 341 Meeting of Creditors Takes Place
Have you ever heard of a 341 Meeting? It's a meeting that takes place during a Chapter 7 bankruptcy case where the debtor, their attorney (if they have one), and the Chapter 7 trustee meet to discuss the case. I've been to a few of these meetings myself, and let me tell you, they're not as intimidating as they may seem. In fact, I've never seen a creditor show up to one of these meetings.
The meeting is relatively short, usually lasting no more than 15 minutes. During this time, the trustee will ask the debtor a series of questions about their financial situation. It's important to be honest and forthcoming with your answers, as the trustee is there to ensure that everything is being done by the book. Your attorney, if you have one, will be there to help guide you through the process and ensure that your rights are being protected.
While the idea of a 341 Meeting may be daunting, it's important to remember that it's just one step in the bankruptcy process. And the good news is that once it's over, you're one step closer to getting a fresh start and moving forward with your life.
Chapter 7 Eligibility Confirmation:
Once you've attended the 341 meeting, the Chapter 7 trustee will have a good idea of whether they'll need to liquidate any of your assets. At this stage, they'll decide what to do with any non-exempt property, based on its retail value and whether it's likely to sell. This decision will determine whether they'll go ahead with liquidation.
Another important consideration is your secured debts. You'll need to decide whether to give up the asset or reaffirm the debt on that asset. This is a common option for vehicles.
Step 8: Take second mandatory debt education course
Before you can file for discharge, it's important to complete the second mandatory debt education course. This course is designed to equip you with the knowledge and skills needed to manage your finances effectively after bankruptcy. Once you finish the course, you'll receive a certificate of completion which you or your attorney can include in your filing as proof of completion. After filing, all that's left to do is wait for your discharge.
By completing the debt education course, you'll gain valuable insights into budgeting, credit management, and debt repayment strategies. These skills will help you build a strong financial foundation and avoid the same mistakes that led to your bankruptcy. It's important to note that failure to complete the course can result in your case being dismissed, so be sure to prioritize this step in the bankruptcy process.
Step 9: Receive your discharge
Congratulations! You have successfully completed all the required steps for Chapter 7 bankruptcy. Now, it's time to wait for your bankruptcy discharge. This is an official court order that releases you from your obligation to pay back your debts. You will receive your discharge in the mail, typically within three to six months of filing for bankruptcy.
Receiving a bankruptcy discharge can bring a sense of relief and a fresh start to your financial life. However, it's important to note that not all debts can be discharged through bankruptcy. For example, student loans and certain tax debts are generally not dischargeable.
It's also important to understand that filing for bankruptcy can have long-term effects on your credit score and financial future. It's a good idea to work with a financial advisor or credit counselor to create a plan for rebuilding your credit and improving your financial health after bankruptcy.
Conclusion
Bankruptcy can be a daunting topic, and there are many misconceptions surrounding it. However, it can be the right solution for many people. If you're considering bankruptcy, our free bankruptcy decisioning portal can help you understand the process, costs, qualifications, and alternatives.
Once you've made the decision to file for bankruptcy and much of your debt has been cleared, it's time to start moving forward with your life. We value our readers' opinions, so please don't hesitate to comment below or send us an email if you have any suggestions.
