Chapter 7 bankruptcy is the most common form of personal bankruptcy in the U.S. Also known as liquidation bankruptcy, it allows you to sell or liquidate your assets to pay off your creditors and cover the costs of filing. The rules for Chapter 7 bankruptcy filing have changed significantly since the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, but increased financial distress have increased filings in the past few years. This guide explains the basics of filing for Chapter 7 bankruptcy today.

Preparing For Filing

First, you need to complete a credit counseling session with one of the bankruptcy court’s accredited centers. The certificate you receive upon completion will be required in your bankruptcy petition. Although you can file for Chapter 7 bankruptcy on your own, it’s also best to hire a bankruptcy attorney to represent you and deal with your creditors.

The Means Test

Before you can file for Chapter 7 bankruptcy, you will need to qualify through the means test. This is basically a test of your ability to pay off your debts. If your income is below the state median, you can file for Chapter 7 bankruptcy. Otherwise, you will be advised to file under Chapter 13, which involves a repayment plan. Your bankruptcy attorney can help administer the means test and ensure accurate results.

Filing Your Petition

Your Chapter 7 bankruptcy filing will include several forms, known as “schedules,” where you provide information on your total debt, income, assets and liabilities, and current creditors. Make sure your information is accurate, as even minor discrepancies can delay or even dismiss your case. You will also need to pay administration and miscellaneous fees upon filing. For Chapter 7 bankruptcy, the fees total $299 as of 2010.

The 341 Meeting

You will be called to a meeting with your creditors, commonly called the
“341 meeting” after the Bankruptcy Code section where it appears, about a month after your filing. During the meeting, a bankruptcy trustee will go over your Chapter 7 bankruptcy information and identify which assets can be liquidated. Creditors can also ask questions during the meeting, although they are seldom present.

Discharge

After the 341 meeting, there is a 60-day wait during which creditors can contest the terms of the bankruptcy. If no one makes such a move, you are discharged from your debt a few days after the 60-day period has passed.
To make the discharge official, you will need to attend a debtor education session. This is similar to the credit counseling course but slightly longer. Once you present your certificate, you are officially discharged from your debt.

About Author :

The writer of this article is Wystan North. He has made his mark by writing on legal issues especially on Filing Bankruptcy procedures in different states. The author regularly writes on bankruptcy related issues like Ohio bankruptcy,Filing Bankruptcy In Ohio, chapter 13 bankruptcy and chapter 7 bankruptcy etc.

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