– Chapter 7 bankruptcy allows you to discharge most of your debts. It is the most common form of bankruptcy used by individuals consumers. In a Chapter 7 bankruptcy case, a trustee is appointed to investigate and supervise your case.
– When you file a Chapter 7 bankruptcy, you must file schedules and a statement of financial affairs. Information you must list on these forms includes your financial history, income, debts and assets; the forms are quite detailed. On your schedules, list of all your debts, including priority debts, debts to secured creditors, and debts to unsecured creditors.
– Remember that if you are seeking to file for bankruptcy, you must file a certificate showing that you have received credit counseling and a budget plan from an approved nonprofit credit counseling service.
– Under either federal or state law, some of your assets may be exempt from creditors during bankruptcy. States have different exemptions. Exempt assets are beyond the reach of unsecured creditors and the bankruptcy trustee.
– The bankruptcy code requires that you give all nonexempt unencumbered assets to your trustee. If these assets have enough value to make a sale worthwhile, the trustee will liquidate them to pay creditors.
– You may be able to reaffirm some debts –that is, promise to pay them–in order to keep certain assets, subject to the approval of the affected creditor.
— You cannot avoid the reach of creditors during bankruptcy simply by transferring title to property that you won. Generally, this restriction applies to transfers made within two years of a bankruptcy filing, but, depending on the circumstances and state law, transfers made even earlier than that may also be undone.
– Bankruptcy does not discharge all debts. You are still liable for some tax claims, alimony; child support, fraudulent debts, student loans, and criminal obligations.
– Husband and wives, depending on state and the status of joint debt, may want to file jointly for bankruptcy.