RESEARCH & LEARN

Eight Steps to Starting a Chapter 7 Bankruptcy


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TERMINOLOGY

Filing for Chapter 7 Bankruptcy is a long and complicated process, but it needn't be one enshrouded in mystery.  Below are the eight primary steps involved in discharging a successful petition:

1. File a petition with a bankruptcy court.

2. File all required documents along with the petition. These may include a statement detailing the petitioner's financial condition, expense reports, tax documents, and a list of assets and liabilities.

3. Pay the required fees involved in filing a petition.  These typically range between $200 and $300.

4. Collect and file all financial documents of the petitioner's spouse if he or she is married. These will also need to be filed with the original petition.

5. Establish protection of assets deemed "exempt" property. This will vary from state to state.

6. Individuals petitioning for bankruptcy may choose between either the state or the federal definition of exempt property. An attorney should be consulted if there is any confusion.

7. The petitioner then works with the court appointed trustee to complete all remaining paperwork and to release nonexempt property.

8. Upon successful discharging of the bankruptcy, the petitioner is no longer responsible for repayment of a certain portion of their debt. Creditors are also barred from pursuing collections against the filing individual.