What You Must Know About Chapter 7 Bankruptcy Discharge

File for Bankruptcy What You Must Know About Chapter 7 Bankruptcy Discharge

What You Must Know About Chapter 7 Bankruptcy Discharge

Filing for bankruptcy, Chapter 7 discharge can be life-saving and a much-needed breath of air for low-income borrowers. Despite being low-income, most borrowers who qualify for a Chapter 7 discharge are well-aware that their cost of living, uncontrollable debts, or other financial issues have exceeded their income. DoNotPay is here to assist those who need more resources and assistance with a Chapter 7 Bankruptcy Discharge.

Not everyone who files for bankruptcy requires the same, Chapter 7, procedural way to file. As part of our DoNotPay Bankruptcy stockpile, we have several resources on file to help borrowers decide whether Chapter 7 or Chapter 13 is appropriate for them, and the ins and outs of filing for bankruptcy. DoNotPay also offers feedback about what happens when one files for bankruptcy, such as the paperwork needed to file like a debt verification letter, a 609 letter. Additionally, when filing for bankruptcy, we also offer information about the downsides, like how long it stays on a credit report, how much it costs, and figuring out the various types of bankruptcy

What Is Bankruptcy? What Happens When I File For A Chapter 7 Discharge? 

In general, bankruptcy is when a debtor takes legal action against creditors and requests a stay against the harassing calls, actions in the collection, and other business transactions in exchange for legal action and debt restructuring programs. With a Chapter 7 liquidation bankruptcy, the borrower typically surrenders assets that are unprotected in bankruptcy claims like a vehicle or other unsecured assets, but the low income of the borrower prevents them from being subject to additional fees. With the liquidation process, a Chapter 7 discharge often means that some debts are forgiven and many of the debts no longer apply. 

In general, Chapter 7:

RequirementSpecifics
Repayment PlanDoes not involve a repayment plan.
IncomeRequires that the borrower's income falls under the state's median income.
Filing FeeFederal law says that the filing fees may be waived if the debtor's income falls short of 150% of the poverty line.

Additionally, you may find that Chapter 7 has the following attributes:

  1. Involves a trustee being assigned designations to the remaining property.
  2. A debtor retains exempt property, but the trustee may liquidate nonexempt assets.
  3. Requires a credit counseling course, filing fees, administrative fees, and other fees in surcharges.

Will I Lose My Property When Filing For A Chapter 7 Discharge? 

With a Chapter 7 bankruptcy, the trustee may try to sell all nonexempt property or possessions as a means to fulfill a Chapter 7 discharge. Whether one loses their individual property or not depends on federal and state provisions, which can be quite complicated. Whether a borrower keeps their property can be dependent upon state law, dependent on federal law, or transcend both to be more helpful to borrowers in dire crisis.

Based on 11 U.S.C. § 522(b), a federal statute on bankruptcy within the Bankruptcy Code, the individual filing for bankruptcy may:

  • Allow the filer to exempt some property as exemptions under federal laws.
  • Allow the filer to exempt some property under state laws.
  • Allow the file to decide whether state or federal laws are more helpful to their case and choose between them.
  • Allow states to address which items may be kept under state law.
  • Mitigate how many assets or which assets qualify for exemptions, which property items apply, and what happens to exempt property (as well as filing for exemption) according to state or federal laws.

How Do I File For Chapter 7 Bankruptcy On My Own? 

Filing for Chapter 7 bankruptcy requires a few steps on behalf of the filer.

This includes:

  1. A borrower has to itemize all assets, their income, their liabilities (debts), and how much is owed.
  2. They have to contact the creditor, which could restart the collections process.
  3. Filers have to pay filing fees, administrative costs, and trustee fees, which may not amount to much, but can harm an already low-income filer.
  4. Answer and provide data about their hardships and be subject to means-testing.
  5. Find and afford a bankruptcy attorney where possible.
  6. Find and submit these costs to the relevant bankruptcy court, if known.

File For Bankruptcy With The Help Of DoNotPay

Filing for bankruptcy is exceedingly difficult in the modern age with many lawyers not guaranteed to provide legitimate legal advice and charging a fortune per billing hour when those filing are already low-income filers. Moreover, the documentation, requisite proof, verification letters, and other required paperwork can overwhelm an already frightened and flustered individual. In these cases, we highly recommend filing with the assistance of our legal guides and online process. 

How to file for bankruptcy using DoNotPay:

If you want to delete old accounts but don't know where to start, DoNotPay has you covered in 5 easy steps:

  1. Search for File for Bankruptcy on DoNotPay.

     

  2. Put together a list of your debts, expenses, and assets. If you need help accessing information like your credit report, DoNotPay can help you get your report.

     

  3. Let DoNotPay walk you through your bankruptcy options and help you determine whether a Chapter 7, Chapter 12, or Chapter 13 bankruptcy is right for you.

     

  4. DoNotPay will then help find the best credit counseling course near you, which you need to complete before filing your bankruptcy forms.

     

  5. Lastly, DoNotPay will gather all of the forms you need (including available fee waivers) and help you locate your nearest bankruptcy court. All you have to do is complete the required forms, prepare your filing fee, and file the application with your local court.

     

And that's it! Once done, the court will give you:

  • Your bankruptcy case number
  • The name of your bankruptcy trustee
  • The date, time, and location of your meeting with your trustee

At this point, your case has been filed! Congrats! The automatic stay now protects you from all debt collectors. Your trustee will then contact you for further financial documents you will need to provide. Make sure to attend your meeting as well as complete the post-filing bankruptcy debtors course!

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