File Your Own Chapter 7 Bankruptcy and Save Up To $2,500 In Legal Fees! If you've already tried alternatives such as debt consolidation loans, nonprofit consolidation programs or consumer credit counseling then chapter 7 bankruptcy may be your best option if you're:

• Unable to make even minimum payments on your credit cards!
• Credit card debts, personal loans or other debts never seems to go down!
• Creditors constantly call demanding payment!
• Being hounded by debt collectors demanding payment!

A change to the bankruptcy law, effective October 17, 2005, requires credit counseling from a government approved organization sometime within the six month period before you can file for Chapter 7 Bankruptcy See more info here...

1. What can a Chapter 7 bankruptcy do for me?
2. Who can file Chapter 7 Bankruptcy?
3. How does it work?
4. How much does filing a chapter 7 bankruptcy cost?
5. What other costs are involved in filing a chapter 7?
6. The Bankruptcy Trustee's Role
7. What exactly does a chapter 7 bankruptcy discharge do?
8. General Chapter 7 Notes
9. Chapter 7 bankruptcy alternatives

Up 1. What can a Chapter 7 bankruptcy do for me?

Chapter 7 bankruptcy provides an "order of relief" that triggers an "automatic stay" thus all creditors and collectors are prohibited from pursuing you or your property outside of the bankruptcy proceeding. Note: This is especially important if you've received a foreclosure notice!

Chapter 7 bankruptcy is also known as a "straight bankruptcy" or "liquidation bankruptcy" because the Trustee gathers and sells your nonexempt assets and then distributes the proceeds to your creditors in accordance with the provisions of the bankruptcy code.

You are permitted to retain certain “exempt property" but all remaining assets are liquidated (sold) by the bankruptcy court Trustee. You should also understand that if you file a chapter 7 bankruptcy you could loose some or all or your property! This may be an advantage or disadvantage depending on how much equity you have in the asset.

The Chapter 7 Bankruptcy Code allows you to keep property or assets by claiming them as "exempt" under either Federal or State exemption laws; whichever applies to your State. See more on Chapter 7 Bankruptcy Exemptions

Up 2. Who can file Chapter 7 Bankruptcy?

Chapter 7 bankruptcy relief is available to individuals regardless of the amount of their debt and whether or not they are solvent or insolvent. It is not available to partnerships or corporations.

IMPORTANT NOTE! You cannot file any bankruptcy chapter if, during the preceding 180 days, a prior bankruptcy petition was dismissed due to your willful failure to appear before the court or comply with orders of the court or you voluntarily dismissed the previous case after creditors sought relief through the bankruptcy court to recover property upon which they hold liens.

Although 99 percent of chapter 7 bankruptcies result in a discharge of debts, your right to a discharge is not absolute, and some types of debts cannot be discharged such as liens on property, delinquent child support, federal student loans and delinquent taxes.

Up 3. How does it work?

It's a pretty straight-forward process.

1. You gather the following information: creditor's names, addresses and amount of debt; source, amount and frequency of your income; a list of all your property and detailed list of your monthly living expenses.
   
   
2. Fill out the required bankruptcy forms (also called petition or casefile)
   
   
3. File your bankruptcy in the nearest federal court
   
   
4. The court issues an "automatic stay" that stops all collection actions and prohibits creditors from initiating/continuing lawsuits or wage garnishment, even telephone calls demanding payment must stop!
   
   
5. Usually about 20 to 40 days after filing your petition, the court will notify you of the 341 meeting which you must attend and generally takes only 10-15 minutes. The purpose of this meeting is for creditors (if any even show up) to question your claim that you are unable to pay your debts. Creditors want to know if you could pay at least 50 cents on the dollar, and if not, they won't waste their time objecting to the discharge.
   
   
6. The courts accepts your petition and the Trustee liquidates (sells off) any nonexempt assets (if you have any).
   
   
7. 60-90 days later the court grants your discharge and send you the official discharge notice via mail a few days later.
   
   
8. With discharge notice in hand, you are officially released from having personal liability for any discharged debt. (creditors cannot take action against you or your exempted property)
   
   
9. Begin rebuilding your credit rating!

Up 4. How much does filing a chapter 7 bankruptcy cost?

Believe it or not, you can file your own bankruptcy paperwork for less than you think!

• Case Filing Fee: $155
• Miscellaneous Administrative Fee: $45
• Trustee Surcharge: $25
• Free Forms

The case filing fee, trustee surcharge and miscellaneous fee comes to $200 and these can be paid in up to 4 payments over 120 days. If a joint petition is filed, only one filing fee and one administrative fee is charged.
(Filing fees are subject to change so be sure to check with the court clerk to be sure)

Up 5. What other costs are involved in filing a chapter 7?

If you decide to not use a professional on-line preparation service, then your cost vary depending on which of the following options you choose:

1. Bankruptcy forms kit, that you fill out on your own, costs $40 to $160 depending on which state you live in.
   
   
2. Purchase bankruptcy software that offers fill-in-the-blank forms similar to word processing programs. Cheap programs run $50 and programs similar to what lawyers use can run $1,000 or more.
   
   
3. Hire a lawyer to prepare the case file and to represent you in court (costs range from $800 to $4000 or more).

Up More on the 341 creditor's meeting Back

If a husband and wife have filed a joint petition, both must attend the creditors’ meeting. It is important for you to cooperate with the trustee and to provide any financial records or documents that the trustee requests.

The trustee is required to question you orally at the meeting of creditors to ensure that you are aware of the potential consequences of seeking a discharge in bankruptcy, including the effect on credit history, the ability to file a petition under a different chapter, the effect of receiving a discharge, and the effect of reaffirming a debt.

In some courts, trustees may provide written information on these topics at or in advance of the meeting, to ensure that you are aware of this information.

In order to preserve their independent judgment, bankruptcy judges are prohibited from attending the meeting of creditors. 11 U.S.C. § 341(c).

In order to accord you complete relief, the Bankruptcy Code allows you to convert a chapter 7 case to either a chapter 11 reorganization case or a case under chapter 13, as long as you meet the eligibility standards under the chapter to which you seek to convert, and the case has not previously been converted to chapter 7 from either chapter 11 or chapter 13. You cannot repeatedly convert case from one chapter to another! U.S.C. § 706(a).

Up 6. The Bankruptcy Trustee's Role Back

A trustee is appointed by the United States Trustee (or by the court in Alabama and North Carolina) to administer the case and liquidate your nonexempt assets. 11 U.S.C. §§ 701, 704.

Typically, most chapter 7 cases involving individual debtors are “no asset” cases so there will be no distribution to unsecured creditors.

If the case appears to be an “asset” case at the outset, however, unsecured creditors who have claims against the debtor must file their claims with the clerk of court within 90 days after the first date set for the meeting of creditors. Bankruptcy Rule 3002(c)

In the typical no asset chapter 7 case, there is no need for creditors to file proofs of claim. If the trustee later recovers assets for distribution to unsecured creditors, creditors will be given notice of that fact and additional time to file proofs of claim.

Although secured creditors are not required to file proofs of claim in chapter 7 cases in order to preserve their security interests or liens, there may be circumstances when it is desirable to do so. A creditor in a chapter 7 case who has a lien on property should consult an attorney for advice.

The commencement of a bankruptcy case creates an “estate.” The estate technically becomes the temporary legal owner of all of your property. The estate consists of all legal or equitable interests of your property as of the commencement of the case, including property owned or held by another person if you have an interest in the property. Generally speaking, your creditors are paid from nonexempt property of the estate (if any).

The primary role of a chapter 7 trustee in an “asset” case is to liquidate your nonexempt assets in a manner that maximizes the return to your unsecured creditors. To accomplish this, the trustee attempts to liquidate your nonexempt property, i.e., property that you own free and clear of liens and the property which has market value above the amount of any security interest or lien and any exemption that you hold in the property.

The trustee also pursues causes of action (lawsuits) belonging to you and pursues the trustee’s own causes of action to recover money or property under the trustee’s “avoiding powers.” The trustee’s avoiding powers include the power to set aside preferential transfers made to creditors within 90 days before the petition, the power to undo security interests and other pre-petition transfers of property that were not properly perfected under non-bankruptcy law at the time of the petition, and the power to pursue non-bankruptcy claims such as fraudulent conveyance and bulk transfer remedies available under state law.

In addition, if your in a business, the bankruptcy court may authorize the trustee to operate your business for a limited period of time, if such operation will benefit the creditors of the estate and enhance the liquidation of the estate. 11 U.S.C. § 721.

The distribution of the property of the estate is governed by section 726 of the Bankruptcy Code, which sets forth the order of payment of all claims. Under section 726, there are six classes of claims, and each class must be paid in full before the next lower class is paid anything.

You do not have to be particularly interested in the trustee’s disposition of the estate assets, except with respect to the payment of those debts which for some reason are not dischargeable in the bankruptcy case. Your major interests, in a chapter 7 case, are in retaining exempt property and in getting a discharge that covers as many debts as possible.

Up 7. What exactly does a chapter 7 bankruptcy discharge do?

A discharge releases you from personal liability for discharged debts and prevents the creditors owed those debts from taking any action against you or your property to collect the debts.

As a general rule, excluding cases which are dismissed or converted, individuals receive a discharge in more than 99 percent of chapter 7 cases.

In most cases, unless a complaint has been filed objecting to the discharge or you filed a written waiver, the discharge will be granted relatively early in the case, that is, 60 to 90 days after the date first set for the meeting of creditors. Bankruptcy Rule 4004(c).

The grounds for denying you a discharge are very narrow and are construed against a creditor or trustee seeking to deny you a chapter 7 discharge. Among the grounds for denying a discharge are:

• You failed to keep or produce adequate books or financial records;
• You failed to explain satisfactorily any loss of assets;
• You committed a bankruptcy crime such as perjury;
• You failed to obey a lawful order of the bankruptcy court; or
• You fraudulently transferred, concealed, or destroyed property that would have become property of the estate. 11 U.S.C. § 727; Bankruptcy Rule 4005.

In certain jurisdictions, secured creditors may retain some rights to seize pledged property, even after a discharge is granted. Depending on individual circumstances, a debtor wishing to keep possession of the pledged property, such as an automobile, may find it advantageous to “reaffirm” the debt. A reaffirmation is an agreement between you and the creditor that you will pay all or a portion of the money owed, even though you have filed bankruptcy. In return, the creditor promises that, as long as payments are made, the creditor will not repossess or take back the automobile or other property.

If you reaffirm the debt, the reaffirmation should be accomplished prior to the granting of a discharge. A written agreement to reaffirm a debt must be filed with the court and, if you are not represented by an attorney, the agreement must be approved by the judge. 11 U.S.C. § 524(c). The Bankruptcy Code requires that reaffirmation agreements contain an explicit statement advising you that the agreement is not required by bankruptcy or non-bankruptcy law. Right click to download a free reaffirmation form Reaffirmation Agreement

If you are not represented by an attorney the bankruptcy code requires a reaffirmation hearing to to ensure the negotiated agreement meets the bankruptcy code. (11 U.S.C. § 524(d). Also, keep in mind that whether or not a reaffirmation agreement exists, you can choose to repay any debt voluntarily, 11 U.S.C. § 524(f).

Most claims against an individual chapter 7 debtor are discharged. so a creditor, whose unsecured claim is discharged, may not initiate or continue any legal or other action against you to collect the obligation.

A discharge under chapter 7, however, does not discharge specific types of debts listed in section 523 of the Bankruptcy Code. You are still responsible for the following debts which cannot be discharged in chapter 7:

• Alimony, child maintenance and support obligations;
• Certain taxes;
• Debts for certain educational benefit overpayments or loans made or guaranteed by a governmental unit;
• Debts for willful and malicious injury by you to another entity or to the property of another entity;
• Debts for death or personal injury caused by your operation of a motor vehicle while intoxicated from alcohol or other substances; and
• Debts for criminal restitution orders under title 18, United States Code. 11 U.S.C. § 523(a).

NOTE: Debts for money or property obtained by false pretenses, debts for fraud or defalcation while acting in a fiduciary capacity, debts for willful and malicious injury by the debtor to another entity or to the property of another entity, and debts arising from a property settlement agreement incurred during or in connection with a divorce or separation are discharged unless a creditor timely files and prevails in an action to have such debts declared excepted from the discharge. 11 U.S.C. § 523(c); Bankruptcy Rule 4007(c).

The court may revoke a chapter 7 discharge on the request of the trustee, a creditor, or the United States trustee if the discharge was obtained through fraud by the debtor or if the debtor acquired property that is property of the estate and knowingly and fraudulently failed to report the acquisition of such property or to surrender the property to the trustee. 11 U.S.C. § 727(d).

Up 8. Notes

1. An involuntary chapter 7 case may be commenced under certain circumstances by the filing of a petition by creditors holding claims against you. 11 U.S.C. § 303.

2. A husband and wife, in a joint petition, can both claim exemptions under the federal bankruptcy laws. 11 U.S.C. § 522(m).

3. United States trustees and bankruptcy administrators are responsible for establishing a panel of private trustees to serve as trustees in chapter 7 cases and for supervising the administration of cases and trustees in cases under chapters 7, 11, 12, and 13 of the Bankruptcy Code. Bankruptcy administrators serve in the judicial districts in the states of Alabama and North Carolina.

4. There is no fee for converting from chapter 7 to chapter 13 but if you request to convert to chapter 11, the fee is $400.

5. Unsecured debts generally may be defined as those for which the extension of credit was based purely upon an evaluation by the creditor of the debtor’s ability to pay, as opposed to secured debts, for which the extension of credit was based upon the creditor’s right to seize pledged property on default, in addition to the debtor’s ability to pay.

Up 9. Chapter 7 bankruptcy alternatives

There are several alternatives to using chapter 7 bankruptcy to eliminate debt. For example, if you are engaged in business, including corporations, partnerships, and sole proprietorship, and you want to remain in business while avoiding liquidation then use Chapter 11 Bankruptcy

If you have regular income you may want to consider filing chapter 13. In fact, the court may even dismiss your case for substantial abuse if you have the ability to propose and carry out a workable and meaningful chapter 13 plan but file chapter 7 instead. (11 U.S.C. 707(b)).

You may be able to reach an out-of-court agreement with your creditors or use a non profit debt consolidation program as an alternative to filing bankruptcy.

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