For most people the thought of filing bankruptcy is a terrifying one and often a last resort. Many people find themselves over their head in debt through no fault of their own, especially those faced with tens of thousands of dollars in medical debt. Filing bankruptcy is a major decision best reached after consulting with a reputable bankruptcy attorney.
Overview of Chapter 7 Bankruptcy
From start to finish this type of bankruptcy takes an average of three to six months. It typically calls for one appearance in bankruptcy court where you or your attorney attest to the accuracy and truthfulness of your petition. The case is considered closed once the discharge is received and qualifying debts deleted.
Prerequisites for Filing Chapter 7 Bankruptcy
The first step is gathering and organizing documentation and paperwork. You will need to compile papers such as records of debts and liabilities, list of exempt property, and verification of income and expenses. You must also supply a document listing all creditors, and a letter stating your position relating to your outstanding debt. Do not leave anything out — if in doubt, include it.
This involves submitting appropriate forms, list of creditors, and proof of completing credit counseling. Immediately following the submission of the petition, an automatic Stay Order ceases most collection efforts. Note that tax debt is not included in the bankruptcy.
Post-Filing and Discharge
Within 15 days of filing the trustee sends to your creditors a notice of filing. Within 40 days you will receive a notification detailing your mandatory meeting with the listed creditors. You will field questions posed by your creditors regarding your petition and finances. Often none of the creditors will appear, but if they do, you are under oath and if you perjure yourself the case will be dismissed and debts will become due. Within three months of the initial meeting the judge will issue a discharge order known as Discharge of Debtor absolving the debtor of all qualifying debts.
Upon receipt of discharge, all creditors named in your petition are forbidden from attempting to collect on any debts included in your bankruptcy. Those that do try can be sued in bankruptcy court. Now is the time to rebuild your credit by paying bills on time and applying for credit cards. Keep track of what is reported on your credit reports and file disputes as necessary.