How to File Chapter 7 Bankruptcy
Filing Chapter 7 bankruptcy can quickly become an overwhelming process for many people, despite that it can take as little as three to six months to complete and is the most common form of bankruptcy. For most individuals, filing bankruptcy with Chapter 7 is a straightforward process. Often the hardest part is deciding if Chapter 7 bankruptcy is right for you, if you qualify, and organizing all the necessary documentation to file Chapter 7.
The process of filing Chapter 7 breaks down into 3 phases: Preparation, Filing, and Rebuilding.
Our bankruptcy attorney, John E. Dunlap, has helped thousands of people through the process of filing for bankruptcy with Chapter 7 that can be overwhelming without the help of an experienced bankruptcy attorney. If you’re thinking about filing Chapter 7 or want to find out if it’s the right choice for you, call us to talk to our bankruptcy law firm today. We offer a free twenty minute strategy session to talk through your situation and unique needs to help you find a path forward to a debt-free life.
Preparing to File Bankruptcy Chapter 7
The first stage of filing for bankruptcy through Chapter 7 is all about organization and getting your paperwork in order to file with the courts. During your petition to the court, you’ll need to be able to answer questions about your debts, assets and other information. Getting everything ready makes filing your bankruptcy go smoothly and helps you take care of debts faster.
There are nearly 30 different forms that can be involved in a Chapter 7 filing, as well as required credit counseling that must be completed before filing. Having an attorney on your side can help you understand the process, know which forms to complete and how to fill them out, and what to do next.
If the process goes smoothly, you can be discharge debts in as little as 100 days from filing and be ready to start your financial life over.
Finished Required Chapter 7 Credit Counseling
If more than 50% of your debt is consumer debt, like personal loans, credit cards, medical debt, or other non-business debt, you’re required to complete a credit counseling course within 180 days before filing Chapter 7. This type of credit counseling is called pre-bankruptcy credit counseling and must be done through a government-approved counseling agency.
In Tennessee, there are a lot of different options for pre-bankruptcy counseling to choose from. Some are free and others aren’t. For a full list of pre-bankruptcy counseling, you can search the U.S. Justice Department’s approved credit counseling agencies by state or view the list of approved pre-bankruptcy credit counseling agencies in Tennessee.
Choosing the right pre-bankruptcy credit counseling is the first step to filing for Chapter 7 because they can help you make a plan to move forward. The Federal Trade Commission provides useful information about how to choose a credit counselor. Credit counseling can help fill in a lot of helpful information no one ever told you before.
While it might seem like this is just a hoop to jump through on your way to filing bankruptcy, credit counseling can be a very useful tool to help you stay out of debt after filing and start to rebuild your credit again. For most people, credit counseling means they work with a trained counselor to create a budget, help them understand your personal finances, and make a plan to help them take control of their money.
In fact, in working with thousands of our clients to help them get out of debt with Chapter 7, we’ve seen many clients come out of counseling empowered about their personal finances, ready to start their financial lives over with tools to succeed.
Hire a Chapter 7 Bankruptcy Attorney to help you file
Most people find that hiring a Chapter 7 bankruptcy attorney at this stage is helpful. While you can file Chapter 7 on your own, having an experienced attorney to help you fill out forms and get paperwork together can help you get through filing faster and easier. In fact, courts and their staff are prohibited to help you understand how to fill our filing paperwork. If you’re worried about being able to afford to hire an attorney, courts generally take legal fees into account when considering your Chapter 7 petition.
We’ve worked with thousands of clients to help them file for Chapter 7 bankruptcy in Tennessee and know the process and steps to take.
Finish the Chapter 7 Means Test
The next step is making sure you’re eligible to file Chapter 7, which can be done by taking the Chapter 7 Means Test.
Determining your eligibility for Chapter 7 can be a bit daunting if you’re unfamiliar with what it takes to file Chapter 7. Working with your Chapter 7 attorney can help you make sure Chapter 7 is right for you, instead of a different type of bankruptcy.
In general, the Chapter 7 Means Test looks at your finances and compares your income with your debts and the median income for your state. Filling out the Means Test paperwork is the first of many documents you’ll have to complete in pre-bankruptcy preparation.
Prepare Chapter 7 Paperwork for Filing
Once you’ve completed pre-bankruptcy counseling, hired an attorney, and taken the Means Test to determine your Chapter 7 eligibility, it’s time to get your Chapter 7 filing ready to take to court. There are over 30 different forms you may need to fill out for a standard Chapter 7 filing and in some places there are extra forms to meet local court rules.
As part of your Chapter 7 paperwork, the court also requires a list of debts to be able to contact the debtors. This is called a debt matrix and is required for filing Chapter 7 bankruptcy.
At John E. Dunlap PLC, we work with thousands of clients to help them fill out the right paperwork, get the documents their need from banks and debt agencies, and fill out paperwork in the right way. A lot of the paperwork can be very confusing and working with an experienced bankruptcy attorney can help you tackle the hundreds of answers you’ll need to provide.
File Chapter 7 with the Court
Many people assume that filing is the hardest part of Chapter 7 but in reality, getting all the documentation together is usually the most difficult. Once you’ve completed the pre-bankruptcy steps, you’re ready to file Chapter 7 with Tennessee courts and be debt free in as little as 100 days.
Filing Chapter 7 with the court involves turning in all the bankruptcy paperwork completed in the pre-bankruptcy preparation, the certificate of pre-bankruptcy credit counseling, the debt matrix, and other required documentation.
We file the Chapter 7 petition on behalf of our clients and the court creates a bankruptcy case number and bankruptcy estate for the case. Once we’ve filed the petition and an Automatic Stay Order, debt collectors are no longer allowed to contact our clients in most cases.
The court then takes control of the case and the U.S. Trustee Program appoints a bankruptcy case trustee to administer it. From here, the rest of Chapter 7 generally moves quickly.
After Filing Chapter 7 Bankruptcy
Once the court has appointed a bankruptcy case trustee, it’s important to still work closely with your attorney to avoid your case being rejected by the Chapter 7 bankruptcy court. The process from filing to discharging debts takes a few months.
Meeting with Bankruptcy Trustee
After the case is filed, your bankruptcy trustee generally requires you to meet to discuss your filing, finances, and other information to help them evaluate your case. This is different from your 341 hearing, or what’s called the Meeting of Creditors or bankruptcy hearing.
The purpose of this meeting is to make sure all your paperwork is in order and you don’t have undisclosed assets or lied on your paperwork. We represent our clients at these meetings with the bankruptcy trustee to help everything run smoothly.
Provide Additional Documentation
Within 7 days of filing, Chapter 7 filing requires you to furnish documents like your pay stub, tax returns, and other financial information. We help you prepare these documents before filing the case so they’re prepared and you’re not rushing to get the right paperwork.
Notice of Chapter 7 Bankruptcy Case
Usually 15 days after filing, the bankruptcy trustee will send a notice to all the creditors listed on the bankruptcy matrix to inform them of the Chapter 7 filing. This allows creditors to be part of the Chapter 7 process through a 341 hearing, or Meeting of Creditors.
Meeting of Creditors – 341 Hearing
The next step is 21 to 40 days after filing and is a hearing between you and the bankruptcy trustee and the creditors. Generally speaking, creditors don’t always attend these meetings but you’ll be required to answer questions about your finances under oath.
We help our clients prepare for the Meeting of Creditors by helping them prepare answers to common 341 hearing questions. If you lie or exclude information during your hearing, your debts may not be discharged so it’s important to prepare for the 341 hearing before. We also attend 341 hearings with our clients.
Creditors have 60 days after the hearing to challenge and if necessary, a second meeting might be scheduled to cover additional information or documents. Working with an experienced attorney can help you avoid a second meeting.
Chapter 7 Abuse Determination
10 days after the hearing, you’ll hear back from your bankruptcy trustee if your Chapter 7 is within the Means Test or not. If your income is too high to use Chapter 7, your case will be deemed “abusive” and you will likely need to file a Chapter 13.
Working with an experienced attorney like John E. Dunlap can help you avoid your Chapter 7 filing being deemed “abusive” by the bankruptcy court and avoid having to start your bankruptcy filing over.
Complete a Financial Management Course
After your 341 hearing, you’ll need to complete a government-approved financial management course. While this is a different course than your pre-bankruptcy credit counseling, the same people you completed your counseling with often offer a financial management course. This course can also be called debtor education, a post-filing course, a pre-discharge course, or personal financial management class.
You can find a list of certified bankruptcy financial management courses in Tennessee or search the Justice Department database by state. The bankruptcy financial management course deadline is within 60 days of your first 341 hearing for Chapter 7 in most cases.
If you don’t complete the course within the deadline for your Chapter 7 filing, your debts will not be discharged and your case will be dismissed.
Chapter 7 Debt Discharge
The final step for most Chapter 7 filings is the debt discharge by the bankruptcy court judge with a “Discharge of Debt” notice to creditors. Usually this happens within 60 to 90 days of your first meeting with creditors (341 hearing). Creditors can file a complaint at that point that may require an attorney to defend your claim in bankruptcy court.
Once a Discharge of Debt has been filed, the debts are discharged and are considered no longer legally enforceable. You’re ready to start your financial life over.
Life after Chapter 7
Once your Chapter 7 process is over, your debts are discharged and you can start your life over with a clean financial slate. It’s important to take care of your personal finances after a Chapter 7 because federal law prohibits you from filing another Chapter 7 for 8 years. Part of that process is rebuilding your credit, managing your personal finances, and sticking with your plan you make during your pre-bankruptcy credit counseling.