Chapter 7 Bankruptcy: 4 Tips

A loss of income, an injury or divorce can cause you to fall behind on your credit card payments and other debts to the point where catching up may no longer be an option. When this happens, you may decide that filing for bankruptcy is the most effective way for you to start fresh with your finances. Chapter 7 bankruptcy may help you accomplish this in a fairly quick manner, and there are a few tips you can keep in mind as you move through the process.

  1. Gather Your Documents 

Collecting the proper documents and submitting them to your trustee in a timely manner can help your Chapter 7 bankruptcy run more smoothly. Gather pay stub, bank statements, and letters from your creditors requesting payment so you can submit them to your trustee or deliver them to a court clerk. Your local courthouse can advise you about where and when to submit these important documents.

  1. Cooperate With the Trustee 

During a Chapter 7 bankruptcy, the court will appoint a trustee to oversee the liquidation of your assets, the proceeds of which are used to pay off your creditors. Because your debts are paid directly from your collected assets, there is no long-term payment plan, as there would be for Chapter 13. It is important that you cooperate fully with the trustee and disclose all of your assets and income so your bankruptcy can proceed smoothly.

  1. Learn About Exemptions 

Federal and state laws allow you a certain amount of exemptions when it comes to what you own, such as your car or your home. Because each entity allows for a certain number of exemptions, you can likely choose between the two. For example, if you already own your car or owe less than the state or federal exemption amount, then you will probably be able to keep your vehicle. Because values of certain possessions vary, your trustee can advise you about what you might be allowed to keep.

  1. There May Be Filing Fees 

As you file for bankruptcy at your local courthouse, you may be charged a variety of fees that cover the cost of processing the bankruptcy. Filing, administrative and trustee fees may all apply to your bankruptcy. You may want to contact your local courthouse to ask about the exact amount of each fee and whether you will need to pay in cash.