- If you are filing a bankruptcy petition under Chapter 7, you should realize that it may result in the loss of your property. Chapter 7 of the Bankruptcy Code will allow you to keep what is referred to as "exempt" property, which is what either the Bankruptcy Code itself or your state's law permits debtors to keep from unsecured creditors.
Exemptions may include a portion of the equity in your primary residence or tools of your trade. In a Chapter 7 bankruptcy, the court appoints a bankruptcy trustee, who is responsible for liquidating property not protected in the bankruptcy and distributing funds to creditors. - If your current monthly income is more than your state's median income, a means test is required by Chapter 7 of the Bankruptcy Code to determine whether the filing is abusive. The means test evaluates if the debtor's current monthly income over a 5-year period (less allowed expenses) is more than $11,725, or 25 percent of the debtor's unsecured debt (if that amount is at least $7,025).
You must receive credit counseling from an approved credit counseling agency 180 days before filing for bankruptcy. This requirement may be waived under emergency situations as determined by the bankruptcy trustee. - Filing a petition with the bankruptcy court is the first step in the Chapter 7 bankruptcy process. Next you must also file with the court schedules of assets, liabilities, current income, expenditures, contracts, lease agreements and a statement of finances. The trustee must also be given a copy of your most recent tax return.
If you are filing as an individual, you need to provide a certificate of credit counseling with debt repayment plan, proof of income received 60 days before filing, a statement of monthly net income, anticipated increase in income or expenses after filing and interest related to federal or state education or tuition accounts.
At the time of filing a case, you must pay a filing charge of $245, a $39 administrative fee and a $15 trustee surcharge, as of 2011. Within 20 to 30 days after the petition is filed, the case trustee must hold a meeting of creditors. Under oath, the debtor must answer questions from both the trustee and creditors. The U.S. trustee will report to the court within 10 days of the creditors' meeting, if the case is presumed to be an abuse. - Being released from the obligation of a debt is referred to as a discharge. Unless a complaint objecting to the discharge or a motion to extend the time to object is filed, the bankruptcy court will issue a discharge order in 60 to 90 days after the meeting of creditors.
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