Seven-Step Process to Get to Chapter 7

| Apr 13, 2021 | Bankruptcy

The COVID-19 pandemic is weighing heavily on everyone and causing terrible financial strains. With loss of income, many people are turning to their credit cards to pay their everyday expenses and are ending up with a ton of debt. Chapter 7 bankruptcy can help relieve people of the burden of those mounting credit card debts.

If you decide to file a Chapter 7, contact an attorney to navigate the process with you. Here are the seven steps that you will go through:

  1. Meet with your attorney and provide information. Your attorney will create your bankruptcy petition and schedules, and will need the following information:
    • Personal information, such as your address, social security card, and driver’s license.
    • List of creditors including their addresses, account numbers, and amount owed.
    • A list of your income and expenses.
    • Copies of tax returns from the last two years.
    • Pay advices if you are working.
    • List of assets (house, car, etc.).
  2. Credit counseling. You will next call a credit counseling agency to receive counseling for your finances over the phone. The cost for this service is usually between $30 to $60.
  3. Means test. Your attorney will run the Chapter 7 “means test” to see if you qualify. If you do, your attorney will file your case.
    • Generally, people with an income of $43,000 or below will qualify under the means test. If your income is higher, you may still qualify depending on your expenses and other factors.
  4. Reaffirmation agreement. If you have secured creditors and want to keep your property (real or personal), your attorney will do a reaffirmation agreement, which involves entering into a contract to continue paying the secured creditor for that property (i.e., house, car, furniture).
  5. Meeting of creditors. During COVID, this step involves filling out a list of questions called Interrogatories to give to the Chapter 7 trustee, along with a list of documents, such as a copy of your driver’s license and social security card.
  6. Financial management course. Next, you will call the credit counseling agency again. The agency will walk you through a financial management course over the telephone and email a certificate of completion to your attorney. Usually, you pay the same amount for this as for credit counseling, especially if you use the same counseling group.
  7. Discharge. This is the step you’ve been waiting for. All of the debt that can be discharged will simply go away, and you will get a fresh start!