Chapter 7 Bankruptcy Process And Debt Relief Alternatives

chapter 7 bankruptcy process debt relief alternatives

You may be at a point where you have tried alternatives to bankruptcy and believe you owe enough debt that bankruptcy is the option for you. 

It may be time to think about your debt relief options. If you are considering filing bankruptcy, you need to understand every step of the Chapter 7 bankruptcy process before submitting your petition. Our guide will help you estimate your bankruptcy qualification, explain the Chapter 7 bankruptcy process and costs associated with filing, and grant you access to a free bankruptcy evaluation with a professional local bankruptcy attorney. 

Before we discuss all of those, here are three essential things you should know before filing; 

1. Estimate If You Qualify To File For Bankruptcy And Get Free Local Attorney Evaluation 

The first step is to see if you qualify for Chapter 7 bankruptcy. You can use a bankruptcy calculator by feeding your information on the calculator. It stimulates actual means testing used in bankruptcy forms. The results will show if you qualify for Chapter 7 bankruptcy or not. 

You also need to schedule a free attorney with a local bankruptcy attorney. Bankruptcy state laws vary from state to state, and thus, a local attorney can provide reliable advice compared to one in a different state. Since bankruptcy attorneys' competency differs, consider their reliability, reviews, relevance, rates, and referrals before deciding to get an attorney evaluation. 

2) Understand Attorney Fee And Filing Costs 

You are filing for bankruptcy because you don't have an income or barely have enough income to meet your debt obligations. So, most people don't recognize that filing for bankruptcy also comes with costs and fees. 

Fortunately, bankruptcy attorneys can understand your situation and can work with a flexible payment plan rather than a one-time payment. While attorney fees may seem daunting and maybe an unnecessary expense, hiring an attorney ensures your case doesn't get dismissed before getting bankruptcy relief. 

An attorney understands the process and can help you file all the necessary documents with the court. Attorney fees will vary from lawyer to lawyer. However, the main factors that affect cost are; 

● The type of bankruptcy you file- are you filing Chapter 7 or Chapter 13 bankruptcy? 
● The state you live in 
● The complexity of your case 
● Attorney experience and expertise 
● Attorney connection 

Remember that costs are based on the state you live in. So when trying to determine the costs, you will want to look up something like “how much does it cost to file bankruptcy in Georgia,” or “how much does it cost to file bankruptcy in Florida,” instead of general cost estimates. Other than attorney fees, you also need to pay filing costs between $300 and $400 for Chapter 7 cases. 

3. Research On The Chapter 7 Bankruptcy Process 

It is easy to know what to anticipate at every step when you understand the process. You could take a Should I File Bankruptcy quiz that helps extrapolate the costs and qualification estimate of Chapter 7 bankruptcy. Filing bankruptcy is a difficult decision, but understanding the process, relieves you of the stress and anxiety of not knowing what happens next. Here is an in-depth guide on the Chapter 7 bankruptcy process; 

A Step-By-Step Guide On The Chapter 7 Bankruptcy Process 

You have probably heard that filing Chapter 7 bankruptcy can help get rid of debt. But how much do you know about the process? Debts can be overwhelming, and you may be tempted to rush and file bankruptcy before understanding the process. The repercussions can be a dismissed case due to failure to pay court fees, not submitting all the required documents, or other reasons that could be avoided by understanding the process. Here is an overview of the process; 

Step 1: Identifying If You Qualify To File Chapter 7 Bankruptcy 

Although Chapter 7 bankruptcy is designed to help people get out of debt, not everyone is eligible to file. So, you need to begin by checking if you qualify before filing. Use a Chapter 7 calculator to estimate if you are eligible for bankruptcy. If you do, you can proceed to the next step. If not, you can consult a bankruptcy attorney for recommendations on if you should file Chapter 13 bankruptcy instead or if there are better debt-relief alternatives. 

Step 2: Consider Other Debt Relief Options To Decide If Filing Chapter 7 Bankruptcy Is The Best Option 

Now that you are sure you qualify to file for Chapter 7 bankruptcy, you need to decide if it is the best option. Bankruptcy is a popular debt-relief solution. However, it doesn't mean it is always the cheapest or best option. For example, you could use this 11 word phrase to help stop debt collectors to give you time to consider all your options. 

You can research other debt-relief options, how they work, how much they cost, their pros and cons. Other alternatives include debt settlement, debt payoff planning, Chapter 13 bankruptcy, and debt management. Compare the costs, advantages, and disadvantages before filing. 

If you are wanting to see what your other options are, there are plenty of debt relief alternatives that you should consider. If you are thinking about debt settlement, you may want to research some of the major debt settlement companies out there. For example, Freedom Debt Relief, National Debt Relief and Turbo Debt all have thousands of reviews, but are they the best options for you? As such, you should consider reading through something like the pros and cons of Freedom Debt Relief or Turbo Debt reviews. 

Step 3: Make A Decision On Hiring An Attorney 

Since Chapter 7 bankruptcy is more straightforward than Chapter 13 bankruptcy, it is possible to file your case without an attorney's help. Unfortunately, most people assume hiring an attorney means additional fees. 

An attorney can help you develop accurate ideas of the short and long-term effects of filing bankruptcy. They can help you learn about the likely outcome depending on your case. An attorney can also help you avoid potential pitfalls that could result in your case being dismissed. 

They are valuable, especially in the filing process, as your attorney has enough experience and knowledge, and thus, they can help ensure your case is processed smoothly. Hiring an attorney can also help you take advantage of your fresh start after your case. 

There are numerous advantages that come with hiring an attorney. So, it is essential to decide if you would like to hire one. When hiring an attorney, you should select a reputable and experienced attorney and ask about their fees before hiring them. 

Step 4: Enroll In The Mandatory Credit Counseling Course 

Under Chapter 7 Bankruptcy, you need to take two mandatory credit counseling courses. The first credit counseling course is pre-bankruptcy, while the second is pre-discharge. You should take these courses seriously as they determine if your case gets dismissed and if you get a discharge. Failure to complete the courses before the deadline could result in a dismissal. 

Step 5: File Your Petition And The Necessary Forms 

When filling out bankruptcy, there are different forms you need to complete and submit. These forms are majorly geared to collecting your financial information. These forms may include; 

● Your income details- source, amount, and frequency 
● A list of your creditors and their claims 
● Your monthly living expenses 
● A list of all the properties you own 
● Other necessary information the court may ask 

Although it is tempting to falsify information to get a discharge, you need to fill out these forms truthfully. Sometimes, the court may ask for verification documents to support the information you fill out, and if the information doesn't match the documents, your case may get dismissed. 

Step 6: Work Alongside Your Trustee 

After filing your petition, and the court goes through it, they will assign a Chapter 7 trustee to assess your financial situation, review your paperwork, and evaluate your property. The trustee works in the interest of your creditors, and they may ask for additional forms like your recent tax filing. You should comply with your trustee and submit any documents they ask for 

Step 7: Attend The 341 Meeting Of Creditors 

The Meeting of Creditors is held to evaluate your financial position and confirm that the information submitted to the court is factual. While the creditors are invited to attend, they barely show up. However, you, your attorney, and the trustee should be present. During the meeting, the trustee will swear you in and ask a series of questions relating to your finances. The meeting tends to be short and can take as little as 15 minutes. 

Eligibility Confirmation 

Once the Chapter 7 trustee assigned to your case gathers enough information, they will decide if they need to liquidate your assets. The decision to liquidate depends on your non-exempt property, and whether liquidating will be worth it depends on whether the asset will sell and how much. 

If you also have secured debts, the trustee will deal with them at this point. There are only two options. The first is to give up the asset to repay the debt or reaffirm the debt on the asset, especially when cars are used as collateral

Step 8: Enroll In The Second And Last Debt Education Course 

Once the Trustee helps you repay your debt, you need to enroll in a debt education course. The course helps you learn how to make better financial decisions to remain financially secure. It also teaches you how to manage debt to avoid being bankrupt again. On completing the course, you will receive a certificate of completion, which you will add to your documents as you file for discharge. Next, you wait to receive a discharge. 

Step 9: Wait For The Court To Grant You Bankruptcy Discharge 

After completing the above steps, wait for the court to grant you Chapter 7 bankruptcy discharge. You will get a notice of the discharge through mail within three to six months from the filing date. 

Top Takeaways And The Chapter 13 Bankruptcy Bottom Line

The Chapter 7 bankruptcy process has many steps, but is methodical. Finally, if you do not qualify for Chapter 7 bankruptcy, you may look at Chapter 13 bankruptcy. With Chapter 13 bankruptcy, you may take a Chapter 13 payment calculator to help you understand the estimated cost of that option. You can find a Chapter 13 payment plan example to help estimate how your Chapter 13 plan payment would work. 

There are a lot of bankruptcy misconceptions going around, including that it is the best option for everyone. However, there are numerous debt-relief options available. So, consider all the options before deciding to file. There's no going backwards once you are bankrupt, so make the right decision for your financial situation.

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