It’s a big decision to file for bankruptcy, and while a person shouldn’t take it lightly, they also shouldn’t feel as if they have failed financially. Sometimes people get stuck in financial predicaments that are really tough to get out of, and there should be no shame in seeking help from an attorney, perhaps a terrible accident happened which led to thousands of dollars in medical bills, or you weren’t able to pay off your student loans as well as you had hoped. Just because a person is in debt doesn’t mean they are irresponsible or made bad life choices. Sometimes we make decisions with the best intentions and it may not turn out how we pictured.
If you are thinking about filing for bankruptcy, then you are sure to have plenty of questions. Here we answer common inquiries people have about Chapter 7 bankruptcy in particular, which is one of the most frequently applied for bankruptcy chapters. The question and answers below should provide some insight on what to know before filing for Chapter 7 bankruptcy:
Can I file for Chapter 7 bankruptcy right away?
You may have to complete a credit counseling program through an agency approved by the court, before you can file the paperwork for bankruptcy. This program should be completed around six months prior to filing, and is something you may be able to do online at your leisure. The program does have a fee, but it can be reduced or waived if you meet low income requirements.
Can you tell me more about the bankruptcy forms?
There are several official bankruptcy forms that the federal bankruptcy courts provide. The most basic form that has to be filled out for Chapter 7 bankruptcy is a Voluntary Petition. You will also have to gather other forms and documents, such as an outline of your debts, property, expenses, and income. As your bankruptcy attorney may tell you, you must list all of your creditors along with the correct mailing address and contact details. Any debts that you forget to list won’t be eligible for discharge.
You will have to indicate how you want to handle your secured debts, such as:
- Reaffirming the debt (establishing a new payment agreement with the creditor you owe money to)
- Keeping up with current payments
- Redeeming property (paying the creditor replacement value of the property)
- Surrendering property (allowing the creditor to take the property on loan back)
What are secured debts?
When it comes to bankruptcy, there are two different kinds of debts — secured and unsecured. Secured debts are debts pertaining to tangible items, such as your home, vehicles, boats, real estate property, etc. Unsecured debts are not tied to any property, and include things like medical bills and credit card debts. After reviewing your list of debts and creditors, your attorney can let you know what debts are likely to be discharged after filing for Chapter 7 bankruptcy.