Chapter 7 bankruptcy was the most common form of debt relief before 2005, when rules were overhauled and bankruptcy requirements were tightened. Today, while still the most common form of bankruptcy in the country, Chapter 7 entails a stricter process and more rigid qualifications. This guide lists some of the most important Chapter 7 bankruptcy requirements and how you can comply.
Credit Counseling
Consumers filing Chapter 7 bankruptcy must complete a credit counseling course from an organization approved by the bankruptcy court. This must be done within 180 days of the filing. The course can be taken in person, online, or through the phone, and usually costs around $30. You will need to present the certificate of completion along with your other bankruptcy requirements in order to file. Note that the certificate is part of the packageyou shouldn't be charged extra to obtain the certificate.
Means Testing
The means test is another element introduced by the 2005 rule change. Chapter 7 bankruptcy requirements now include taking the means test, a way of determining a debtor's capacity to pay. If your disposable incomeyour monthly income after basic necessities are paid foris less than your state's median, you can file under Chapter 7. Otherwise, you are deemed capable of making partial payments and can only file for Chapter 13 bankruptcy. Your bankruptcy attorney can help administer the means test and determine which chapter you qualify for.
Fees and Forms
Once you've satisfied the initial Chapter 7 bankruptcy requirements, you can proceed to the actual filing. Here, you submit all your bankruptcy forms and documents to the bankruptcy court and pay the appropriate fees. Forms can be obtained from the U.S. Courts website, and your bankruptcy attorney can help you fill them out accurately. Bankruptcy fees for Chapter 7 are $299, comprising the filing, administrative, and miscellaneous costs. You can make a one-time payment or pay up to four installments.
Debtor Education
The debtor education course is the last of the Chapter 7 bankruptcy requirements. You will need to take the course after your bankruptcy has been approved so that you can be officially discharged. Like the credit counseling course, this can be taken in person or through the phone or Internet. It costs around $50 and has to be provided by a court-approved center as well. Once you present your certificate, the court will issue your notice of discharge and you are officially free of obligations.
