Step by Step: Chapter 7 Bankruptcy in 7 Clear Steps

Dealing with debt can be overwhelming. Your path to a fresh financial start doesn’t have to be. The Chapter 7 bankruptcy process can be broken down into 7 clear steps.

1. Meet with an experienced bankruptcy attorney. During a free initial consultation, a bankruptcy attorney will listen to and analyze your situation to determine whether or not a bankruptcy is a viable solution for you to deal with your debt.
2. Pay a set fee for your Chapter 7 bankruptcy. For most Chapter 7 bankruptcy cases, you will pay a set fee to your attorney, which is due in full prior to the case being prepared and filed. This is in contrast to a retainer that your attorney bills against for time spent at an hourly rate.
3. Provide your attorney with documents. In your Chapter 7 bankruptcy paperwork, you are required to list all that you own, all the creditors you owe, and your monthly household income and expenses. As such, your bankruptcy attorney will request documentation and information relevant to drafting the paperwork such as:
   1. Tax Returns. Your last two (2) years State and Federal returns. If you have any tax returns that have not been filed as required, you must file them with the proper taxing authority prior to your bankruptcy being drafted and filed.
   2. Income Information. Your last six (6) months of income, which are typically paystubs.
   3. A List of assets. You will complete a handout with an inventory of your assets, including house, cars, household goods, electronics, etc. For many items you will use garage sale or Craigslist values.
   4. A List of household expenses. You will provide an itemized list of household expenses, including mortgage/rent, utilities, food, clothing, insurance, etc. In preparing this information, it will be helpful to review bank statements for at least the last six months.
   5. A List of Creditors. You will receive a copy of a comprehensive bankruptcy-based credit report. If a creditor is not included, you must provide us with a list of creditors, including account number and creditor’s address. Medical debts and pay day loans are common examples of debts that may not show up on your credit report.
4. Complete a Short Credit Counseling Course. You must complete a credit counseling course prior to filing. The course can be completed online and takes about one hour. The course completion certificate is only valid for 180 days, so you need to make sure you don’t complete the course until you are close to filing your case.
5. Review and sign your Chapter 7 bankruptcy paperwork. Your bankruptcy attorney will meet with you to review the bankruptcy paperwork to ensure that it accurate and complete. Your bankruptcy attorney will then file your case with the bankruptcy court. Once filed, your creditors cannot start or continue any efforts to collect a debt. This includes phone calls, letters, emails, filing lawsuits, and continuing garnishments.
6. Attend one bankruptcy court hearing. About 4-5 weeks after you file your Chapter 7 bankruptcy, you will attend a bankruptcy court hearing with your bankruptcy attorney called a First Meeting of Creditors. You should not fret too much because creditors rarely show up to the meeting. Also, the name implies that there is a second meeting, which is misleading because this is the only time you will have to go to court. At that meeting, you testify under oath in front of a Trustee (who is not a judge), that the information contained in your bankruptcy paperwork is true and accurate. You usually spend less than 10 minutes answering the Trustee’s questions.
7. Debts Are No Longer Owed. Typically, 60 days after the court hearing the bankruptcy court enters the discharge order, eliminating your legal obligation on your debt. The discharge does not apply to student loans, child support, and most tax debt. Because of your Chapter 7 bankruptcy, you are freed from past debt and can enjoy your fresh financial start.

---