When you’re struggling to pay off your debt, sometimes bankruptcy seems like the only option. However, it is important to choose the right bankruptcy code or chapter that fits your needs. Before you start the application process, consider this overview of the requirements for filing for Chapter 7 bankruptcy.
What is Chapter 7 Bankruptcy?
When filing for Chapter 7 bankruptcy, the trustee liquidates your non-exempt assets and uses the proceeds to pay the creditors. In addition, part of your property may be subject to liens and mortgages that pledge the property to other creditors. However, the Bankruptcy Code allows you to keep certain exempt property, such as motor vehicles (up to a certain value), necessary clothing and household goods, appliances, pensions, public benefits, and a portion of your home’s equity.
Chapter 7 bankruptcy is available to individuals, partnerships, corporations and other business entities. In order to qualify for chapter 7 bankruptcy, you must:
- Receive credit counseling from an approved credit counseling agency within 180 days before filing.
- Have not had your bankruptcy petition dismissed due to failure to appear in court or comply with court orders.
Be sure to discuss your eligibility requirements with a bankruptcy lawyer before starting the application process.
How to File
In order to complete the Official Bankruptcy forms that make up a Chapter 7 bankruptcy petition, you must provide certain information, including:
- A list of all creditors and amount of their claims.
- The source, amount, and frequency of your income.
- List of all your property.
- Detailed description of your monthly living expenses, including food, shelter, clothing, taxes, utilities, transportation, etc.
Married individuals must gather this information for their spouse as well, regardless of whether or not they are also filing for bankruptcy.
Looking for a Bankruptcy Attorney in Chicago? Licensed bankruptcy lawyers with Cutler & Associates, Ltd. specialize in Chapter 7 bankruptcy codes and bankruptcy alternatives.