Chapter 7 bankruptcy filing does not require a debt repayment plan. In accordance with the Bankruptcy Code, the court appointed bankruptcy trustee is assigned to collect and put up for sale all the debtor's nonexempt assets. The trustee then uses the profits from the sale of said assets to pay creditors that hold of claims against the debtor. Some property or assets cannot be sold in this manor because they are subject to liens such as mortgages that guarantee the property or asset to the creditor in the event of nonpayment. the Bankruptcy Code allows certain property to be exempt from liquidation by the trustee. The debtor is permitted to keep the exempt property.
Chapter 7 bankruptcy is available to individuals, partnerships, corporations, or other forms of business. However, relief in the form of discharge of debt is only available to individuals, not to businesses. Some debts cannot be discharged and the right to discharge debt is not guaranteed for individuals. Chapter 7 relief is available to a petitioner regardless of the debt, solvency, or insolvency of the debtor. However, the filing debtor must complete credit-counseling course from a government approved credit-counseling agency within the 180-day period before filing for chapter 7. If the debtor manages to work out a debt management plan in the credit-counseling course, it must be submitted to the court with the bankruptcy papers. After the chapter 7 bankruptcy is approved, the debtor has no liability for any discharged debts.
To be eligible for chapter 7 bankruptcy, the debtor must file a petition for bankruptcy with local bankruptcy court that serves the jurisdiction where the debtor resides. If it is a business, the petition must be filed with the court responsible for the jurisdiction where the business is located or where the business is registered.
In addition to the petition for bankruptcy, the debtor is responsible for filing:
- schedule of assets
- schedule of liabilities
- schedule of current income
- schedule of expenditures
- statement of financial affairs
- schedule of executory contracts and unexpired leases
- copy of the tax return or transcripts for the most recent tax year
- certificate of completed credit counseling course
- debt repayment plan developed through credit counseling
- paystubs or evidence of payment from employers
- statement of monthly net income
- record of interest in federal/state qualified education accounts
A married couple can file individual petitions or a joint petition, but regardless of how the couple files they must submit all the same financial and expense information for the entire household.
A bankruptcy attorney can assist with a chapter 7 bankruptcy filing and make sure that all the necessary documentation is turned in with your petition. This methodical and thorough inspection of your application can be the difference between being accepted and being denied.
