Chapter 7 Bankruptcy
What Chapter 7 Bankruptcy does: Chapter 7 Bankruptcy is the consumer bankruptcy that allows innocent but unfortunate debtors a fresh start as long as they qualify. This fresh start means that they can discharge most unsecured debts such as credit card debt, medical debt, and signature loans.
What Chapter 7 Bankruptcy does not do: Chapter 7 Bankruptcy will not discharge tax debts, child support, alimony, student loans, government fines/costs or liability for personal injury caused by the debtor’s driving under the influence of a substance.
How Do I Know If I Qualify? Qualification for bankruptcy is a simple matter of comparing your household income to the Median income for your household size. If your household makes as much as or less than the median income for an average household of the same size in your state, you qualify. Even if you make a little more, there are other factors that come into play that allow you to still qualify. This is called the Means Test. For example in Oklahoma from November 15, 2013, to November 15, 2014, the medians are:
2 person household – $51,097
3 person household – $55,641
4 person household – $64,916
Add $8,100 for each additional individual after 4.
What Kinds of Questions Will an Attorney Ask When I Call to Inquire?
- Have you ever filed bankruptcy before?
- Have you lived in the same state for the last 2 years?
- Have you lived in the same county for the last 6 months?
- Do you own your home or are you renting?
- Are you current on your payments whether buying or renting?
- Do you own any other real property other than your home?
- How many vehicles do you have?
- Are you still making payments on any vehicles and, if so, are you current?
- How much credit card debt do you have? How much medical debt?
- Do you have signature loan or payday loan debt and when was it incurred?
- Do you have non-dischargeable debt like:
- Tax debt, child support, alimony, student loans
- Do you own any non-exempt assets that could be sold to pay creditors?
- Boats, motor homes, travel trailers, stocks, bonds. ATVs
What is the Process for filing?
- The first thing you need to do is see if you qualify. Usually, a qualified attorney can tell you whether you qualify in a five-minute telephone conversation.
- Next, you need to meet to sign contracts and get some documents we call our Homework Packet that will tell you all we need to gather to get your case filed.
- Then you will need to gather those requested documents and fill out the Homework Packet as thoroughly as possible disclosing all of your assets and listing all of your creditors and those collecting for your creditors.
- Then the attorney will need some time to organize it all and prepare your documents. You will then want to meet with the attorney and go over those documents and make any corrections before they are filed.
- Your attorney will most likely file electronically and you will receive a notice of the filing along with an invitation to a meeting of the creditors. This will take place in about 30 days after the filing occurs.
- You will want to discuss with your attorney any reaffirmation of secured debt that you might want to keep as there are extra steps that would need to be taken.
- You will also need to take a course in credit counseling and another in financial management that can be done online; one before the case is filed and the other after.