Chapter 7 bankruptcy is a form of bankruptcy that eliminates your debts. In some cases, it may require liquidation or the selling of assets in order to pay off debts. However, in almost all Chapter 7 cases, the filer can keep their home and vehicles. I. The other option for bankruptcy is Chapter 13 which is a repayment plan for your debts. However, Chapter 13 is not right for everyone, and in most cases, Chapter 7 is the best option. If you’ve met with a bankruptcy attorney, and you’ve determined that chapter 7 bankruptcy is the best fit for your situation, how can you go about filing bankruptcy?
Qualifications for Chapter 7 Bankruptcy
Like every form of bankruptcy, there are different qualifications that must be met for Chapter 7 bankruptcy. If you’ve decided you want to file chapter 7, doing some research and meeting with an experienced bankruptcy attorney can help you meet the requirements to file a bankruptcy. For chapter 7, what are the specific requirements that must be met?
The most important qualification for bankruptcy is the Means Test. This test is used as a means of determining eligibility for filing bankruptcy. The test begins by testing your household income. To qualify for Chapter 7, you need to prove that your income is below the state’s average income. A lawyer can help you gather documentation spanning the last 6 months (as this is the time span of the Means Test). If, however, you don’t pass this first section of the test, there is a second chance to qualify – the remaining portion of the means test.
Expenses are also taken into consideration when calculating your eligibility for bankruptcy. Rent, food, bills, and other necessities are all considered to determine your disposable income. If the test proves your disposable income is low enough, you can still qualify for chapter 7. This is one of the more challenging, detail oriented portions of the Means Test, and an attorney can help ensure you don’t miss expenses or make other small mistakes that can disqualify you from filing.
In addition to the Means Test, an individual must not have completed chapter 7 or chapter 13 bankruptcy in the past 6-8 years. A person must not have even filed a petition in the last 180 days for bankruptcy that was dismissed by a court or by the individual themself. If you have, you are ineligible for chapter 7.
How To File Bankruptcy Chapter 7
As with all forms of bankruptcy, you need to have a bankruptcy attorney to guide you through paperwork and ensure you qualify for the assistance bankruptcy provides financially. While it is another expense to manage, not hiring an attorney can result in incorrectly filing paperwork or missing information that ends up getting your case dismissed.
The process for filing chapter 7 bankruptcy is similar to chapter 13 in which credit counseling is required. Within a short period before filing, you must meet with a non profit credit counseling agency to receive counseling and guidance. This is a necessary step to filing chapter 7.
After the paperwork is submitted, a trustee is assigned to your case. They will set up meetings between you and your creditors in which you and your attorney will go over your paperwork and monetary situation.
After handling secured debts, and taking a financial education class, your case is eligible to be discharged. This typically happens within 6 months of filing bankruptcy, and after discharge, debts are forgiven.
If you are ready to file for bankruptcy and live in Illinois, contact our Chicagoland bankruptcy attorney, Mark Schottler. He has extensive knowledge of filing chapter 7, chapter 13, and chapter 11 bankruptcy. Set up your free 30-minute consultation here.