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Filing Personal Chapter 7 Bankruptcy is simple and easy with the help of bankruptcyinstruction.com. We will help you save money on legal fees and get a Fresh Start on your credit.

What is Bankruptcy?

Bankruptcy is a process established by a set of federal laws that is designed to give debtors a “fresh start” by canceling many of their debts through an order of the court.
Bankruptcy also allows creditors who are owed money a chance to get their designated share of any money the debtors can afford to, or are obligated to, pay back.
When a bankruptcy is filed, creditors have to stop any attempt to collect a debt, at least temporarily. There is usually immediate relief from creditor pressure, and a bankruptcy can stop a pending foreclosure sale of your home, a garnishment of your wages, or a threatened repossession. Most creditors cannot call, write or sue you after you have filed bankruptcy.

What is Chapter 7?
 

CHAPTER 7
A. Chapter 7 is known as "straight" bankruptcy or "liquidation." In a bankruptcy case under Chapter 7, you file a petition asking the court to discharge your debts. The basic idea in a Chapter 7 bankruptcy is to wipe out (discharge) your unsecured debts in exchange for your giving up certain property which exceeds certain limits called "exemptions". "Exempt" property is property which the law allows you to keep when you file bankruptcy. In most cases, all of your property will be exempt. But property which is not exempt is sold, with the money distributed to creditors. If you want to keep property like a home or a car and meet your state‘s exemption laws, you can “reaffirm“ your secured assets and file a Chapter 7.

SPECIAL NOTE: The few debts Chapter 7 generally does not eliminate include child support, alimony, student loans, and taxes. However, student loans and taxes are dischargeable if the debtor can prove a "Extreme Hardship". This is most difficult to prove. One would basically need to be unemployed with virtually no chance of employment in the future for an order to enter holding said debts dischargeable. If you qualify for "Extreme Hardship", then you must see a lawyer.

Do I qualify for a Chapter 7 Bankruptcy?

Under the new rules, the first step in figuring out whether you can file for Chapter 7 is to measure your "current monthly income" against the median income for a family of your size in your state. Your "current monthly income" is not your income at the time you file, however: It is your average income over the last six months before you file. For many people, particularly those who are filing for bankruptcy because they recently lost a job, their "current monthly income" according to these rules will be much more than they take in each month by the time they file for bankruptcy.

Once you've calculated your income, compare it to the median income for your state. If your income is less than or equal to the median, you can file for Chapter 7. If it is more than the median, however, you must pass "the means test" - another requirement of the new law - in order to file for Chapter 7.

To complete the Chapter 7 process, you will need to meet the counceling requirements.

Special Note: If you have lots of stocks, bonds, rental property, then special consideration will be needed.

What is the new "Means Test"?

With the “new bankruptcy laws” in effect, debtors will have to first pass a two-part means test before filing for Chapter 7 bankruptcy.

Your Income Vs. Your State's Median Income

In the first part of the means test, your monthly income multiplied by 12 is compared to your state's median annual income. Your state's median income would be below your state's highest incomes and above your state's lowest incomes.
If your income falls at or below your state's monthly median income, then your Chapter 7 bankruptcy filing will likely be successful.
On the other hand, if your monthly income does not fall below your state's median income, then your income will then be factored into a formula. Your formula results will determine your ability to file for Chapter 7.

Means Test Formula

Under the Means Test, any creditor, trustee or judge will look at your monthly income, minus certain living expenses like food and rent. Your Chapter 7 bankruptcy will likely be successful if you are unable to pay at least $6,000 over the next five years ($100 per month). However, if you can pay at least $10,000 over five years ($166.67 per month or more) your Chapter 7 will likely be denied.
If you could afford more than $6,000 but less than $10,000 over five years, then a mathematical calculation determines whether your Chapter 7 will likely be successful or not. If you could afford to pay 25% or more of your unsecured debt, then a Chapter 7 will likely be denied. If you can't afford to pay 25% of your unsecured debt, your Chapter 7 filing will likely be successful. Examples of unsecured debts would include medical, credit card bills and personal loans. Note that you can still opt for Chapter 13 in either of these cases.

What are the New Counseling Requirements?

Filing Personal Chapter 7 Bankruptcy is simple and easy with the help of bankruptcyinstruction.com. We will help you save money on legal fees and get a Fresh Start on your credit.

If you are considering filing either Chapter 7 or Chapter 13 bankruptcy, the first step is to get consumer credit counseling from an approved certified credit counseling agency approved by the United States Trustee‘s office. The agency will provide you with a "certificate" showing that you completed the process. This certificate must be filed with the bankruptcy court when you file your bankruptcy petition.

Before you can file for bankruptcy under either Chapter 7 or Chapter 13, you must complete credit counseling with an agency approved by the United States Trustee's office. (To find an approved agency in your area, go to the Trustee's website)

Counseling is required even if it's obvious that a repayment plan isn't feasible or you are facing debts that you find unfair and don't want to pay. You are required only to participate, not to go along with any repayment plan the agency proposes. However, if the agency does come up with a repayment plan, you will have to submit it to the court, along with a certificate showing that you completed the counseling, before you can file for bankruptcy.

Once your bankruptcy case is over, you'll have to attend another counseling session, this time to learn personal financial management. Only after you submit proof to the court that you fulfilled this requirement can you get a bankruptcy discharge wiping out your debts. (The website above also lists approved debt counselors.)

In addition, debtors have to also complete a course on Personal Financial Management before completing either Chapter 7 or Chapter 13 bankruptcy.
You normally have 60 to 90 days to complete this course.

How long is the Chapter 7 Bankruptcy process?
 
Usually the same day the court receives your bankruptcy paperwork they issue you a case number. This is the case number you would tell to your creditors to let them know you have filed bankruptcy. Generally the court sends you a "Notice of Hearing" time within the same week of receiving your papers. That hearing time is generally within 30-45 days of when you filed the bankruptcy. Generally, within 60 days after the hearing, you will receive a final letter from the Trustee that all your debts have been discharged. So the total time is usually under 120 days from start to finish. However, the effects of filing bankruptcy are immediate. From the minute you file, no company can continue to sue you. All hearings in any other cases cease until the bankruptcy case is finalized. This is called an automatic "Stay".

What will happen at the hearing?

At the hearing, the Trustee will ask you a few simple questions:
1) Do you think your situation will change soon?
2) Are there any assets or debts you have failed to list in these papers?
3) Do you understand that chapter 7 bankruptcy will be on your credit report for 10 years?

The meeting is a "low stress" event and no special preparation is required in most consumer cases. After this brief interview, you are dismissed and you will generally receive a final letter from the Trustee that all your debts have been discharged within 60 days.

What should I bring to my meeting of creditors?

A. Your trustee will usually contact you through correspondence with a list. It is recommended that your bring:

You MUST bring to the Meeting:
Required before the meeting: Not later than 7 days before the date first set for the Meeting of Creditors the debtor must supply to the trustee a copy of the Federal income tax return required under the "new" laws for the most recent tax year.
Proof of identity (driver's license or governmental photo ID and your social security card; and paycheck stub.

Court Costs

The Bankruptcy Court has a filing fee of $274.00. Under the new bankruptcy laws, you can pay the filing fee in full or spread the payments out in two to three payments. Please indicate to us whether you want to pay the court's filing fees in full or make installment payments. We will prepare the paperwork/forms accordingly (so the court will know how to collect their filing fees/payment).

Where do go to file bankruptcy?
 
Bankruptcy paperwork is filed at the Bankruptcy District Courthouse in the Bankruptcy District where you live. The Courthouses are located in major cities. If you file under the State Exemptions, you must have lived in your district for at least 180 days (6 months) to qualify for a bankruptcy there. With our Bankruptcy Service, we even provide you with the address to your courthouse with instructions on where to mail the forms. That way you don't even have to go to the Courthouse to start the bankruptcy.

Can I keep property with Chapter 7?
 
There are certain exemption laws for each State as well as Federal exemption laws. Most States will let you choose either State exemptions or Federal exemptions to file under. The exemption laws you choose will determine whether you loose any property, if at all. Most of the time, a house and a car that are on secured loans can be kept if the payments are up to date. You will still have to continue making the payments on the secured loans until they are paid off. However, all cases are different

How many times can I file for Chapter 7?

Once every eight years.

The article is reproduced (qualitybankruptcy)

What exactly is bankruptcy? Will it wipe out all my debts?

Bankruptcy is a federal court process designed to help consumers and businesses eliminate their debts or repay them under the protection of the bankruptcy court. Bankruptcies can generally be described as "liquidation" or "reorganization." Under a liquidation bankruptcy (Chapter 7), you ask the bankruptcy court to wipe out (discharge) the debts you owe. Under a reorganization bankruptcy (typically Chapter 13, for consumers), you file a plan with the bankruptcy court proposing how you will repay your creditors. You must repay some debts in full; others may be repaid only partially or not at all, depending on what you can afford.

What Is Bankruptcy?

When you file either kind of bankruptcy, a court order called an "automatic stay" goes into effect. The automatic stay prohibits most creditors from taking any action to collect the debts you owe them unless the bankruptcy court lifts the stay and lets the creditor proceed with collections. For more information, see How Bankruptcy Stops Your Creditors: The Automatic Stay.

Certain debts cannot be discharged in bankruptcy; you will continue to owe them just as if you had never filed for bankruptcy. These debts include back child support, alimony, and certain kinds of tax debts. Student loans will not be discharged unless you can show that repaying the debt would be an undue burden, which is a very tough standard to meet. And other types of debts might not be discharged if a creditor convinces the court that the debt should survive your bankruptcy.

What is the difference between Chapter 7 and Chapter 13 bankruptcy? Which one lets me keep my property?

In Chapter 7 bankruptcy, you ask the bankruptcy court to discharge most of the debts you owe. In exchange for this discharge, the bankruptcy trustee can take any property you own that is not exempt from collection (see below), sell it, and distribute the proceeds to your creditors. For more information on Chapter 7, see An Overview of Chapter 7 Bankruptcy.

In Chapter 13 bankruptcy, you file a repayment plan with the bankruptcy court to pay back all or a portion of your debts over time. The amount you'll have to repay depends on how much you earn, the amount and types of debt you owe, and how much property you own. For more information about Chapter 13, see An Overview of Chapter 13 Bankruptcy.

You lose no property in Chapter 13, because you fund your repayment plan through your income. In Chapter 7, you select property you are eligible to keep from a list of state exemptions. Although state exemption laws differ, states typically allow you to keep these types of property in a Chapter 7 bankruptcy:

Equity in your home, called a homestead exemption. Under the Bankruptcy Code, you can exempt up to $20,200 of equity. Some states have no homestead exemption; others allow debtors to protect all or most of the equity in their home.
Insurance. You usually get to keep the cash value of your policies.
Retirement plans. Most retirement benefits are protected in bankruptcy.
Personal property. You'll be able to keep most household goods, furniture, furnishings, clothing (other than furs), appliances, books and musical instruments. You may be able to keep jewelry only worth up to $1,000 or so. Most states let you keep a vehicle as long as your equity doesn't exceed several thousand dollars. And many states give you a "wild card" amount of money -- often $1,000 or more -- that you can apply toward any property.
Public benefits. All public benefits, such as welfare, Social Security, and unemployment insurance, are fully protected.
Tools used on your job. You'll probably be able to keep up to a few thousand dollars worth of the tools used in your trade or profession.

Am I free to choose between Chapter 7 and Chapter 13? Which type of bankruptcy should I use?

If you meet the eligibility requirements for both, then you can choose the type of bankruptcy that makes the most sense for your situation. However, you may not have a choice:

Under the new bankruptcy law, filers whose incomes are higher than the median income for a family of their size in their state may not be allowed to file for Chapter 7 bankruptcy if their disposable income, after subtracting certain allowed expenses and required debt payments, would allow them to pay back some portion of the unsecured debt over a five-year repayment period. (For more on this and other Chapter 7 eligibility requirements, see Who Can File for Chapter 7 Bankruptcy?)

Also, if you have secured debts of more than $1,010,650 and unsecured debts of more than $336,900, for example, then you cannot use Chapter 13. (For more on this and other Chapter 13 eligibility requirements, see Are You Eligible for Chapter 13 Bankruptcy?)

Most people who file for bankruptcy choose to use Chapter 7, if they meet the eligibility requirements; Chapter 7 is a popular choice because, unlike Chapter 13, it doesn't require filers to pay back any portion of their debts. For more reasons why you might want to file for Chapter 7, see When Chapter 7 Bankruptcy Is Better Than Chapter 13.

However, Chapter 13 might be a better choice, depending on your situation. For example, if you are behind on your mortgage and want to keep your house, you can include your missed payments in your Chapter 13 plan and repay them over time. In Chapter 7, you would have to make up the whole past due amount right away -- and you might lose your house, if your equity exceeds the exemption amount available to you.

What is a Chapter 7 Bankruptcy Filing?

Chapter 7, known as straight bankruptcy, involves liquidating all assets that are not exempt. Exempt property may include cars, work-related tools and basic household furnishings. Some property may be sold by a court-appointed official-a trustee-or turned over to creditors.

Both types of bankruptcy may get rid of unsecured debts and stop foreclosures, repossessions, garnishments, utility shut-offs, and debt collection activities. Both also provide exemptions that allow you to keep certain assets, although exemption amounts vary.

Personal bankruptcy usually does not erase child support, alimony, fines, taxes, and some student loan obligations. Also, unless you have an acceptable plan to catch up on your debt under Chapter 13, bankruptcy usually does not allow you to keep property when your creditor has an unpaid mortgage or lien on it.

What is a Chapter 13 Bankruptcy Filing?

A Chapter 13 filing may be the preferred method for consumers with assets they don’t want to lose, and willing to retire as much of their debts as possible, but under a less-pressured structure. Some debt balances may be partially discharged, and the filer agrees to a monthly payment to the trustee for distribution to the remaining creditors.

Any bankruptcy is a serious mark against your credit record, but Chapter 13 filings may be perceived as slightly less serious than Chapter 7 filings since you are exhibiting an interest in retiring your debts. The previous defintion applies to Tennessee residents. For specific bankruptcy information based on your city of residence visit for more information.

Chapter 13 bankruptcy allows you, if you have a regular income and limited debt, to keep property, such as a mortgaged house or car, that you otherwise might lose. In Chapter 13, the court approves a repayment plan that allows you to pay off a default during a period of three to five years, rather than surrender any property.

What is a 341 meeting?

Sounds scary doesn't it? You have been summoned to a 341 meeting with your creditors. Don't sweat it.

You will go in to a court room, with trustee(s) and your lawyer sitting at a table. Creditors will be there and can ask the trustee(s) and lawyer questions in an open format.

In 98% of the consumer bankruptcy cases, the creditors won’t do as thing. You will just sit there. The trustee may ask a question or two, like, “Will you reaffirm any debt?” You will have already discussed this with your lawyer. There will be no big surprises. It’s really boring. It will take your whole day. Be zero concerned about it.

What Assets are Defined as Exempt from Bankruptcy Liquidation?

There are some variations in the asset exemption levels from state-to-state, particularly over land and property values. For example, in some states, the residence and farm property equity exemptions are substantially higher than the federal levels. You can file using the federal defined exemptions, or your state’s, but not a combination between the two.

Current federal exemptions include:

1.$16,160 in equity in your personal residence
2.up to $2,575 in equity in any one motor vehicle
3.up to $425 in value in any particular item of household furnishings, or wearing apparel, up to a total of $8,625
4.up to $1,075 in jewelry held for personal use
5.up to $1,625 in tools of the trade
any unmatured life insurance contract you own, except for credit life insurance contract
any and all health aids such as a wheelchair
the right to receive certain support, personal injury, and disability payments.
6.There is also a “wild-card” exemption of $800 to $8,880 for other assets not otherwise specifically exempted; the exact amount depends on how much of the personal residence equity exemption was utilized. Each of these exemption levels are doubled under a joint spouse filing, and each are subject to periodic cost-of-living adjustments.

7.Exercising your right to utilize state exemptions amounts instead of the federal levels is a case-by-case consideration you should discuss with your attorney.

What types of liquidation are there?

Members' voluntary liquidation (or members' voluntary winding up) - this is when the shareholders of a company decide to put it into liquidation, and there are enough assets to pay all the debts of the company, i.e. the company is solvent.
Creditors' voluntary liquidation (or creditors' voluntary winding up) - this is when the shareholders of a company decide to put the company into liquidation, but there are not enough assets to pay all the creditors, i.e. the company is insolvent.
Compulsory liquidation (or compulsory winding up) - this is when the court makes an order for the company to be wound up (a 'winding-up order') on the petition of an appropriate person. If there is more than one director, all the directors must jointly present the winding-up petition - a single director cannot present a winding-up petition.
If you are a director or a shareholder and you are also a creditor of your company, you may wish to present a winding-up petition on the grounds that the company cannot pay its debts. Please read our publication 'Dealing with debt - How to wind up a company that owes you money' for more information.

Where can I get advice about liquidation?

Before you take any action to put a company into liquidation, you should obtain your own legal or financial advice about this procedure and any other options available to you. You can get advice from your local Citizens Advice Bureau, a solicitor, a qualified accountant, an authorised insolvency practitioner, any reputable financial adviser or a debt advice centre.

What are the alternatives to liquidation?

There are 3 possibilities:

1.Informal arrangement - the company could consider writing to all its creditors to see if a mutually acceptable agreement can be reached. It is advisable to include a timetable of when payments will be made.
2.Company voluntary arrangement (CVA) - this is a formal version of the arrangement described above.

3.The directors would need to apply to the court with the help of an authorised insolvency practitioner, who would supervise the arrangement and pay the creditors in line with the accepted proposals.
4.Administration - this is a court procedure that gives the company some breathing space from any action by creditors. A court can grant an administration order to enable the company to:
survive, in whole or in part, as an ongoing business;
organise a voluntary arrangement or compromise with its creditors;
get a better realisation of assets than would be possible if the company went into liquidation.

What exactly is bankruptcy? Will it wipe out all my debts?

Bankruptcy is a federal court process designed to help consumers and businesses eliminate their debts or repay them under the protection of the bankruptcy court. Bankruptcies can generally be described as "liquidation" or "reorganization." Under a liquidation bankruptcy (Chapter 7), you ask the bankruptcy court to wipe out (discharge) the debts you owe. Under a reorganization bankruptcy (typically Chapter 13, for consumers), you file a plan with the bankruptcy court proposing how you will repay your creditors. You must repay some debts in full; others may be repaid only partially or not at all, depending on what you can afford.