If you are facing overwhelming debt and can’t keep up with payments, declaring bankruptcy is a legal option that can provide you with financial relief. Whether you are a first-time filer or a debtor with a previous bankruptcy record, this guide will walk you through the step-by-step process of declaring a Chapter 7 bankruptcy.
Before beginning the bankruptcy process, you must understand that under the Bankruptcy Code, a Chapter 7 bankruptcy filing is intended for debtors in severe financial crises and can lead to the selling of nonexempt properties. Since the process can get complex, it will be advantageous to hire a bankruptcy lawyer who can protect your properties and ensure the maximum of debt allowable gets discharged. You will typically go through these stages when declaring bankruptcy.
- Check Your Eligibility
You can’t file Chapter 7 if you have filed the same type of bankruptcy in the past eight years, or have a bankruptcy case dismissed in the last 180 days. Moreover, to be eligible, your average monthly income should fall below the median income in your State. If your earnings are above average, you may still file but only if you pass the means test.
- List All Debts
Compile a list of all your debts and categorize it into either secured and unsecured debts. The difference between the two is that in secured debt, the lender holds property as a “security deposit” should the borrower fail to meet his payment obligation. A bankruptcy lawyer can help identify which debts are dischargeable (can be eliminated by the bankruptcy judge) or nondischargeable (such as alimony, child support, student loan, and taxes).
- Disclose All Assets
You will need to submit a list of all your assets to the bankruptcy trustee who will be able to determine which properties can be protected by bankruptcy exemptions under federal and state laws, and which are nonexempt and can, therefore, be placed in a bankruptcy estate for selling to serve as payment for creditors.
- Attend Credit Counseling
You must meet with a credit counselor from an agency approved by the bankruptcy court, and pay associated counseling fees, prior to filing your petition. Make sure to do this within the six months preceding your intended filing date. You have an option to do it online. Ask your lawyer or visit the U.S. Department of Justice website for more details.
- Prepare Bankruptcy Forms
As a debtor, you must accomplish the Voluntary Petition form if you plan to declare bankruptcy under Chapter 7. Along with this, submit your property listing, a list of all debts with names and contact details of your creditors, a declaration on any properties sold or transferred for the past two years, and how you plan to act on any secured debts. Your bankruptcy attorney can help you explore legal options on redeeming your property, reaffirming your debt, or surrendering properties. Once you have filed all forms, an automatic stay will be released which shall freeze all creditor collections, foreclosure, eviction, wage garnishment, or lawsuits.
- Meet With Creditors
Less than a month after filing bankruptcy, you will receive a notice on when the creditor’s meeting will take place. You will be asked certain questions under oath, regarding your financial situation. Attendance in this meeting is critical as this will determine which debts will be discharged.
- Receive Your Discharge Notice
Within 60 days after you meet with creditors, the bankruptcy court shall release the notice of discharge. You will no longer be liable to pay back any debt included in this document, and any debt collector will lose the right to seek repayment.
Are you thinking of filing bankruptcy in Maryland? A bankruptcy lawyer can help you.
Ensuring a smooth bankruptcy proceeding is possible when filers have experienced bankruptcy attorneys by their side. If you are looking for a reliable legal counsel, contact Grafton Firm, LLC and get started in your path to debt relief.
If your financial situation is dire enough for you to qualify, a Chapter 7 bankruptcy is usually your best choice. This will relieve you or most or all of your debt and allow you to get a fresh start.