A Chapter 7 bankruptcy filing enables you to have your debts wiped out without you having to make payments to the bankruptcy trustee to help pay them off. There are specific requirements for filing a Chapter 7, so it is imperative that anyone considering this option takes the time to ensure they have everything in order prior to filing their petition.
Because no payments are made to the court, the petitioner must meet a means test that ensures they don’t have the ability to pay their debts. This is meant to ensure that only people who truly need to have debts discharged are allowed to.
In order to file for bankruptcy, you also have to undergo credit counseling from an approved agency within the 180 days prior to filing the petition. It is sometimes possible to bypass the counseling if there is an emergency or if there isn’t a certified agency within the area, but these exceptions are rare.
When you file, you must have a complete list of your debts. You can’t pick and choose what you include in the case and what you try to pay off on your own. By requiring debtors to include all debts, the court can ensure that there isn’t any preferential treatment of one creditor over another.
On top of those considerations, you also need to find out how the filing will impact your assets. These are divided into two broad categories – exempt, which means they can’t be claimed by the bankruptcy proceedings, and nonexempt, which means they can be liquidated to pay off some of your debts.
Knowing as much as you can about Chapter 7 bankruptcy can help you make an informed decision. You need to do what you feel is best for your needs.