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Filing Chapter 7 bankruptcy can be a daunting process which confuses many people. It won’t be that way for you if you familiarize yourself with this kind of liquidation proceeding. A liquidation is process in which all of your assets are used to discharge your liabilities. A Chapter 7 proceeding is commonly known as a straight bankruptcy. A trustee is appointed by the courts and this person determines if you qualify for exemptions. With exemptions, you may be able to keep your house, car, and other necessary items, depending on your particular situation. Whatever is deemed non-exempt must be given to the trustee who converts it into payment for your creditors. In order to attempt filing Chapter 7 bankruptcy, you need to know how to go about the process.
What You Need for Filing Chapter 7 Bankruptcy
In order to file for Chapter 7 bankruptcy, there are a variety of documents you need to gather. Since these documents can take a while to get together, make sure you begin collecting them as soon as you know you’re going to file. The documents you need to go about filing Chapter 7 bankruptcy include:
- A detailed list of assets and liabilities
- An exempt property list
- A document showing all income and expenses
- A written statement attesting to your financial state
- A sworn document containing a list of all creditors you owe
- Your written intentions concerning your consumer debts
Step 1 - File for Chapter 7 Bankruptcy
Once you have prepared the necessary documentation, you are ready to proceed to the clerk of courts to file. This will automatically create an order of relief, which means that your creditors cannot pester you outside of the bankruptcy case.
Step 2 - Attend Creditor Meeting
The trustee appointed in your case will call together a meeting of your creditors. They will be able to ask you about your situation. You will have to comment on your debt and ability to pay these debts.
Step 3 - Wait While Creditors File Proof of Claims
Your creditors have to file an objection to your exemptions within 30 days. Within 90 days of the first meeting date, they must also file proof of claims, though in some cases, the creditors are granted an extension. Finally, creditors have 60 days to file an objection to the discharge of your debts. You should know that any government debts, such as student loans and taxes, won't be discharged. Additionally, if a creditor wasn’t originally listed with your debts, they may also be given special extensions. If you commenced with misconduct on any debts, such as fraud or embezzlement, that particular debt won’t be discharged.
Step 4 - Your Debts Will Be Discharged
After 60 days past the first creditors meeting, if no objections against the discharge of your debt have been filed, and there is no motion to dismiss, your debt will generally be discharged.
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