Chapter 7 Bankruptcy Information - How to file Chapter 7 Bankruptcy

If you have been having financial difficulties

,here is some chapter 7 bankruptcy information that will help you to learn how to file chapter 7 bankruptcy. Prior to filing a Chapter 7 bankruptcy case, you must be able to pass under what is called a "means test". This means test figures out which people have the financial ability to pay a significant portion of their bills to creditors. The means test involves comparing the persons's income to the average income of the state or county in which the debtor resides. If the debtor's gross income is above the average, another set of calculations (based on ratios of debt to income) will identify whether he or she can file a Chapter 7 liquidation or Chapter 13 repayment case.

It does not matter where you are located, in order to file bankruptcy, there is a lot of paperwork to file. The bankruptcy process begins with the filing of a petition and many forms with the local bankruptcy court. These forms consist of itemized lists of all your assets, debts, income, expenses, as well as other very important personal background and financial information. In addition, you must file a certificate of credit counseling

, tax returns (or transcripts) for the recent tax year; all tax returns that were filed with the IRS while your bankruptcy case is pending; copies of pay stubs or other proof of income received 60 days prior to filing; statement of currently monthly income and any reasonably anticipated changes in income or expenses after filing.

In a Chapter 7 (liquidation) case, the bankruptcy court will appoint a trustee to represent the interests of your creditors. After a month or so from the date of the filing, you have to be present at a meeting of creditors in which the trustee will answer all questions regarding your assets, debts, and other financial information. Despite the name, banks and creditors hardly ever are at these meetings. Once finished with the meeting, the trustee liquidates the property that may be taken from you. He or she will then take the cash and split it amongst the creditors. Once liquidation is done, the court will schedule one last hearing and discharge all debts. At this point, you no longer legally owe your creditors and they are forbidden from trying to collect anything from you.

Chapter 7 bankruptcy is the "granddaddy of all bankruptcies." With Chapter 7 liquidation, you start with a clean slate, however, Chapter 7 also comes with the most consequences. You will have your credit rating drop considerably, most banks and credit card companies will not lend to you, and it is also difficult to finance a car. Although, due to the current financial crisis, there may be a little bit more leniency given to all bankruptcy filers, but don't expect much.

Chapter 7 Bankruptcy Information - How to file Chapter 7 Bankruptcy

By: Alexander Travis

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