Chapter 7 bankruptcy is the most common type of bankruptcy fluid citizens of the United States can file. Debtors pay their creditors by selling their properties to pay off their debts to different creditors. Ch 7 is designed to do away with unsecured debts such as medical bills, credit cards, and personal and payday loans.

Determining Eligibility for Ch 7 Bankruptcy

Anyone can file for Ch 7 bankruptcy whether they are an individual, part of a corporation or other business entity, or part of the partnership. However, an individual cannot file if a prior bankruptcy petition was dismissed within the previous 180 days because of a debtor’s failure to show up in court and fulfill its orders. Debtors also cannot file for Ch 7 bankruptcy if they dismissed the previous case voluntarily after their creditors tried to get relief from a court to regain a property. This means that in order to file, a debtor must also receive credit counseling from an approved agency within 180 days prior to filing.

The Ch 7 Bankruptcy Filing Procedure

If you are serious about filing Ch 7 bankruptcy forms, technology can help you. Sites such as totallbankruptcy.com offer information and recommendations for your specific area. The first step in filing a Ch 7 bankruptcy is to go to a local bankruptcy court to complete a petition form. Aside from this, an individual must also file the following:

• Schedule of liabilities and assets
• Schedule of current expenditures and income
• Statement of the individual’s current financial affairs
• Schedule of unexpired leases contracts

For the executory, the individual must also provide a copy of tax records from the recent year in addition to tax returns that are filed in the case.

The Role of the Trustee

When an individual files for Ch 7 bankruptcy, the court assigns a trustee to liquidate the individual’s nonexempt assets. It’s up to the trustee to liquidate a debtor’s non-exempt assets in such a way that maximizes return to unsecured creditors. If the debtor has assets that are exempt, or if the debtor has assets with valid liens, then the trustee will generally file a “no asset” report. Most Ch 7 bankruptcy cases are no assets cases. However, if it is one, claims must be filed with the court in less than 90 days after the initial meeting of creditors.

In typical asset Ch 7 cases, creditors do not need to file proof of claim since there is no distribution. If, at a later date, the trustee recovers assets for distribution to creditors, then the creditors will be notified by the bankruptcy court. The creditors will have additional time during which they can file their proof of claim. 

Filing for bankruptcy is a way to start fresh and move on. Ch 7 bankruptcy stays on a credit report for 10 years. 

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