How to File for Chapter 7 Bankruptcy

In 2021, California had the highest number of Chapter 7 Bankruptcy filings than any other state in the United States. Of the total 40,279 filings of Chapter 7 Bankruptcy, 38,542 were non-business filings and 1,737 were filed by businesses.

If you have a significant amount of debt and are interested in filing for Chapter 7 Bankruptcy, there are several important things to understand. Read below or contact a bankruptcy attorney from The Mlnarik Law Group, Inc., to help guide you through the process.

Why File for Chapter 7 Bankruptcy

There are a variety of reasons why someone might feel compelled to file for bankruptcy. Commonly known as “liquidation bankruptcy,” Chapter 7 Bankruptcy is meant to clear away many types of unsecured debts of the filer. This means if you’re far behind your bills, have incurred debt, and are unable to afford monthly debt payments and living expenses, then filing Chapter 7 Bankruptcy would be an effective course to take.

When you file for Chapter 7 Bankruptcy, one of the first steps the court takes is places an automatic temporary stay on any debts you currently have. An automatic temporary stay is a provision in US bankruptcy law that temporarily prevents creditors, collection agencies, government entities and others from pursuing debtors for money owed.

In addition to preventing the pursuit of money owed by debtors, an automatic temporary stay:

  • Stops creditors from collecting payments
  • Prevents the garnishing of your wages
  • Prevents foreclosing on your home
  • Stops repossessing of property
  • Preventing you from being evicted
  • Prevents your utilities from being turned off

Keep in mind that while the court will prevent creditors from the above list options, the court will instead take legal possession of your properties and appoint a bankruptcy trustee to your case.

Qualifications for Chapter 7 Bankruptcy

In order to successfully file for Chapter 7 Bankruptcy, you must first fit the qualifications to file. These qualifications include:

  • Complete an individual or group credit counseling course within 180 days of filing.
  • Either 1) the average of your monthly income in the last 6 months must be less than the median income for the same-sized household in your state, or 2) you must pass a means test.
  • You can’t have filed for Chapter 7 Bankruptcy in the past 8 years.
  • You can’t have filed for chapter 13 bankruptcy in the past 6 years.

Steps to Complete Before Bankruptcy Discharge

As mentioned above, once you’ve completed filing for Chapter 7 Bankruptcy, your creditors will stop bothering you soon after. The next step you will be expected to make is to turn over financial documents proving the accuracy of the statements in your bankruptcy filing.

In addition to turning over documents, you will also be expected to attend a meeting of creditors. Otherwise known as a “341 Hearing,” this meeting will be run by your bankruptcy trustee and provides you the opportunity to learn about the bankruptcy process and for involved parties to question you about your assets, liabilities and financial condition.

Another step you’ll be expected to take after filing is completion of a debtor education course, to which you’ll file the completion certificate in court.

Completion of Required Steps

Once you’ve completed all necessary steps, you will receive a Chapter 7 Bankruptcy discharge. This court order will wipe out qualifying debt and is thus the most important part of your bankruptcy case.

In addition to wiping out your debt, bankruptcy discharge orders will stop a creditor from calling you, sending demand letters, reporting nonpayment of obligation to credit reporting agencies, filing lawsuits against you, repossessing your property, evicting you, turn off your living utilities, or take other actions to collect any discharged debt.

Don’t Forget to Meet with a Bankruptcy Attorney

Filing for Chapter 7 Bankruptcy is an important process if you’re struggling with debt. But there are several significant steps involved that can easily overwhelm you without proper guidance from a bankruptcy attorney.

The Mlnarik Law Group, Inc., provides expert bankruptcy law services with exceptional results that will bring you both peace of mind and quality financial relief. Before you get started on your Chapter 7 Bankruptcy filing, contact a Mlnarik Law attorney via phone at (408) 919-0088, email, or by contact form.