Chapter 7 Bankruptcy Law : A Brief Description Of The Process

Whatever stage of your debt you should look at getting advice early as this would

show your creditors that you are serious about trying to clear your debt.

More credit debt solutions will be available if you contact your creditors

before they have to get with you. If however your debts are out of control then your only option may be to think about bankruptcy.

There are currently two chapters for personal bankruptcy in the United States, one is known as chapter 7 and the other one is chapter 13.

Chapter 7 is normally for individuals who have more unsecured than secured debt. For people with lots of secured debt then a chapter 13 bankruptcy is possibly the best way to go. In 2005 the chapter 7 bankruptcy law changed and now before allowing you to file for bankruptcy you have to have a means test.

This test varies from state to state, but the primary criteria is that if your average household income is lower than that of your area then you can normally file for chapter 7 bankruptcy. Once it has been agreed that you could file for

bankruptcy then there are further stages to go through. Before filing your case you ought to obtain some counseling to help with the information that the courts will require. This normally consists of a survey about the following.

Current Income, Household expenses, Overall debts .

This normally takes about half an hour to complete and can be done over the phone with a court approved agency. Next you need to meet with your attorney who will go through the chapter 7 bankruptcy forms with you. These forms are normally about 50 pages long and you will have to itemize the following.

Assets, Debts, Income, Expenses

There are also a variety of other financial questions that you will have to answer to complete the application process. These forms are very detailed and you will have to sign them under oath.

Once your case is filed then there are two remaining steps that have to be completed.

The first step is to complete a two hour financial management class, this can be done either online or in person. The subject matter of this class is about household budgeting and financial management.

The next step that you need to take is attending a meeting which will hear your case.

For the majority of chapter 7 cases you will not have to face your creditors, instead a representative of the bankruptcy court will ask you questions in relation to your case.

The total time from start to finish of this process normally takes between 4 to 5 months to complete.

Please remember that this is not the easy way out of paying your debts and there maybe further problems with getting credit at a later date.

You need to therefore take the appropriate legal advice before entering into any bankruptcy or other debt reduction programs.

by: Joel Hambit

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