Filing chapter 7 bankruptcy is different from filing a chapter 13 bankruptcy because no repayment plan is established to repay creditors. With a chapter 7 filing, the bankruptcy trustee assigned to the particular case takes into account all of the debtor’s assets, and then subsequently sells off such assets in order to pay the debtor’s creditors. If you are planning on filing a chapter 7, some of your property and other assets will be made exempt as is stipulated within the bankruptcy code. It is important to realize that if you do file for chapter 7 you will have some of your assets liquidated that aren’t considered exempt, and therefore you must expect some loss of property during any chapter 7 case.

A person, or some business entity including a partnership or corporation may file for a chapter 7 bankruptcy. If you are an individual, you must now pass what is called the “chapter 7 means” test in order to qualify for  chapter 7 relief. The chapter 7 means test takes into consideration your current income, assets, and debt to determine whether you can payback a significant portion of that debt. A debtor will then either pass the means test, or not, and if they do not pass they will only be eligible for chapter 13 relief, and thus will not be eligible for a chapter 7 proceeding. A person can also not file for chapter 7 bankruptcy if that person had already filed a bankruptcy petition 180 days before the chapter 7 filing, and the petition was dismissed due to their failure to show up in court, or follow the court’s orders. The debtor filing chapter 7 must also within 180 days prior to the filing have undergone credit counseling from an approved counseling agency. If you are being subjected to an emergency situation, or if there aren’t enough approved agencies in your area, you may be able avoid credit counseling and still be able to file for chapter 7.

Be aware that a full discharge is only available to individuals, and not business entities. If you are an individual, and think that a chapter 7 automatically will discharge all of your debts, you should understand that some debts may not be completely discharged. You should also grasp the fact that liens on property typically aren’t discharged during a chapter 7 proceeding.

To begin the chapter 7 process, a debtor must file a petition with the bankruptcy court that is serving the area where the debtor lives. Along with this petition, a debtor must also file an array of documents with the court that include a listing of their assets and liabilities, their current income and expenses, a statement that details the current financial state, and a rundown of any contracts and leases that have not yet expired. The debtor will then be assigned a chapter 7 case trustee at the time of the initial filing, and this trustee will handle all of the collection of documents, and will play the role of mediator between both the debtor and creditors. The debtor must ask what other documents might be required to their case trustee, as often time unique documents that pertain to the individual debtor’s own situation are needed. A 245 dollar case filing fee, and a 39 dollar administrative fee, as well as a 15 dollar surcharge for the case trustee is required at the time of filing. These payments can be made in installments, and four payments paid over 120 days is the standard schedule for these fees.

After the initial petition filing, all creditors will be unable to follow-through with any collection actions against that debtor. Typically 20 to 40 days after the petition filing, a meeting will be scheduled by the case trustee for the creditors and the debtor. The debtor will then have to answer questions provided by the creditors on hand, and will also have to provide any other documents that may be required.

Hopefully after this meeting has taken place, the debtor is granted a full discharge by the bankruptcy court, and does not have to payback any of his or her creditors. A chapter 7 filing is complex though, and every debtor’s situation is different. The court may stipulate that the debtor must payback certain creditors over time, and not all debts may be subject to discharge.

Filing chapter 7 can provide a debtor a tremendous amount of relief from their past debts, and often-times can provide a debtor a virtual fresh-start when it comes to their financial future. The filing process isn’t too complex, but the rules and regulations are, and this is why it is recommended that any debtor consult a qualified attorney that specializes in bankruptcy law before filing a chapter 7 petition. As long as the debtor understands fully what a chapter 7 bankruptcy entails, and can follow through with the appropriate steps that are required during the process, the debtor should be well on their way to a level of freedom from their past debts.