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How A Chapter 7 Filing Is Handled

If you're worried that your debts have become overwhelming and impossible to ever pay off, filing for chapter 7 bankruptcy may be an option worth pursuing. This is a process where a significant portion of your assets will be sold off to settle your current debts permanently. You might wonder, however, how the process will be handled. Let's take a look at a handful of key issues that folks often ask about before filing.


The standard for seeking chapter 7 protection is that your monthly income must be below your state's medium income. You must also submit to what's called a means test. This is an effort by the court to establish just how bad your financial situation is. The court can look at a variety of concerns, including what assets you have, your current debts, and your cost of living.

It's important during every aspect of this process to be forthright in answering the court's questions. While bankruptcy fraud is rarely prosecuted unless the behavior is egregious, there is a real risk that your petition may be dismissed if the judge is less than amused with how you've responded to requests for information. Lay it all out there so the court can get an accurate idea of what your situation is.

Paying for Counsel

One of the most obvious concerns people have during the process is how they're going to pay for a chapter 7 bankruptcy lawyer. Most attorneys expect to see all their fees paid for before they'll file a client's paperwork. The reason for this is that the attorney's costs can, in theory, become one more debt that might be discharged once the case is concluded. That means the court will treat the attorney as just another creditor.

If you need to make payments, discuss this with the chapter 7 bankruptcy lawyer before starting a case. They may let you make payments, but they'll probably hold onto the paperwork until their fees have largely been paid.

Folks in downright dire situations should contact the bar association in their state. They can provide you with information about alternatives if there's no way for you to pay for a lawyer.

Naming Creditors

You must name all creditors who hold outstanding debts in your name. Failing to name a creditor may be grounds for continued collection efforts on their part. You also won't be able to file again for at least eight years, so you want as much debt discharged as possible.