Bank statements, credit-card statements, loan documents and pay stubs should all be gathered when preparing for bankruptcy under Chapter 7. Your bankruptcy petition, schedules and statement of financial affairs will all be completed with this information. The U.S. Courts website offers free copies of these documents.
These include a statement of financial affairs, declarations about debtor educational attainment and a voluntary petition for relief. You’ll find a complete list of your assets and liabilities as well as a breakdown of your income, expenses, and transfers of property.
Filing a bankruptcy petition with the clerk of your local court and paying a filing fee is all that is required of you.
To find a court near you, use the federal court locator, select “Bankruptcy” under “Court Type,” and enter your zip code in the bottom box.
Counseling for People with Financial Problems
Prior to filing for Chapter 7 bankruptcy, nearly every individual who wishes to do so is required to meet with a certified credit counsellor. It is possible to participate in person, online, or over the phone in this session. Finding a certified credit counsellor in your area is easy thanks to a search engine provided by the U.S. Department of Justice.
Some potential debtors may not be aware of their other options, which is the rationale for this requirement. You might be able to avoid bankruptcy with the help of a credit counsellor.
For most debtors, a financial management course is required before they can be discharged. The same group that provided credit counselling may also teach this class. Each class should take about two hours, whether in person, online, or over the phone.
Knowing how the Means Test works
The “means test” calculation, which is part of the bankruptcy filing process, must also be passed successfully by the debtor. It was added to the Bankruptcy Code in 2005 and calculates whether you can afford or have the “means” to pay at least a portion of your debts if you file for bankruptcy.
Your income is compared to the state median, and your expenses are compared to IRS Local Standards, or what people in your area pay for similar expenses.
If you don’t pass the means test, you can only file for Chapter 7 bankruptcy protection under very specific circumstances. You could also file a Chapter 13 repayment plan case as an alternative. The bankruptcy court requires the completion and submission of Form 122A-2 for the calculation of the means test.
The Creditors’ Meeting
It is common to refer to the “meeting of creditors” that occurs after filing for Chapter 7 bankruptcy as the “341 meeting” because of the section of the bankruptcy code that stipulates its existence. Everyone listed as a creditor in the bankruptcy papers receives a copy of this notice.
Any creditor can show up at this meeting and ask questions about the debtor’s bankruptcy and finances, as the name suggests. If you have car payments, the only creditors who may show up are your car lenders, who will inquire about your financial situation.