Free Bankruptcy - WessBkBlog

Re-printed With Permission Original Article Written By: Josh Wu

One of the primary purposes of chapter 7 bankruptcy is to discharge certain debts in order to give an individual debtor a "fresh start." The debtor has no liability for discharged debts. In a chapter 7 bankruptcy case, however, a discharge is only available to individual debtors and married couples, not to partnerships or corporations. 11 U.S.C. § 727(a)(1). Although a chapter 7 bankruptcy case usually results in a discharge of debts, the right to a discharge is not absolute, and some types of debts are not discharged. The few debts that are not discharged include child and spousal support.

  Who Can File Chapter 7 Bankruptcy?

To qualify for chapter 7 Bankruptcy, the debtor may be an individual, a partnership, or a corporation or other type of business. While corporation may file a chapter 7 bankruptcy, they do not receive a discharge.

For individuals, subject to the Bankruptcy means test, relief is available under chapter 7 bankruptcy, irrespective of the amount of the debtor's debts or whether the debtor is solvent or insolvent. This means that it does not matter how much you owe. Your $5,000 debt is as easily discharged as a $50,000,000 debt. 

ZMT Bankruptcy offers the only free means test that we are aware of and it is recommended that you visit their site for the test. 

USA Bankruptcy Associates and some of the other full-service bankruptcy preparers, incorporate the means test into every chapter 7 bankruptcy that they prepare, so if you are going to hire USA Bankruptcy Associates, you do not need to take the means test first.  

We recommend that debtors use only attorneys or full-service bankruptcy preparation companies, since they produce bankruptcy filings, meeting all the requirements of chapter 7 bankruptcy law. We do not recommend bankruptcy software since most of them are not real software, but deceptively repackaged blank forms that can be downloaded by anyone for free, from the court web sites. Here are the full-service bankruptcy preparer companies that we recommend: 

• Miller Bankruptcy Group
• Bridgeport American Bankruptcy
• Zmt Bankruptcy
• USA Bankruptcy Associates
• Easy Bk Services
• Debtor Aid

An individual cannot file chapter 7 Bankruptcy if during the preceding 180 days, a prior bankruptcy petition was dismissed, due to the debtor's willful refusal to appear before the bankruptcy court, or comply with orders of the bankruptcy court, or the debtor dismissed the previous case if creditors sought relief from the bankruptcy to recover property for which they hold liens. 11 U.S.C. §§ 109(g), 362(d) and (e). 

In addition, individuals must received credit counseling from an approved credit counseling agency either in an individual or group setting. 11 U.S.C. §§ 109, 111. There are exceptions in emergency situations or where the U.S. trustee has determined that there are insufficient approved agencies to provide the required counseling. If a debt management plan is developed during required credit counseling, it must be filed with the court. 

  How Chapter 7 Bankruptcy Works

Chapter 7 bankruptcy begins with the filing of a petition with the bankruptcy court serving the area where the individual lives or where the business debtor has its principal place of business or principal assets. In addition to the petition, the debtor must also file with the court: (a) schedules of assets and liabilities; (b) a schedule of current income and expenditures; (c) a statement of financial affairs; and (d) a schedule of executory contracts and unexpired leases. Fed. R. Bankr. P. 1007(b). All full-service bankruptcy service companies listed on this site prepare all of the necessary chapter 7 bankruptcy forms. 

For your convenience, here is a list of the full-service bankruptcy preparation companies complying the the chapter 7 bankruptcy law. Our Recommended Chapter 7 Bankruptcy Providers: Miller Bankruptcy Group, Bridgeport American, ZMT Bankruptcy, USA Bankruptcy Associates, EasyBkServices.com. Debtor Aid. 

Individual debtors with primarily consumer debts have additional document they have to filing in addition to the petition. They must file: a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling; evidence of payment from employers, if any, received 60 days before filing; a statement of monthly net income and any anticipated increase in income or expenses after filing; and a record of any interest the debtor has in federal or state qualified education or tuition accounts. Id. 

A husband and wife may file a joint petition or individual petitions. 11 U.S.C. § 302(a). Even if filing jointly, a husband and wife are subject to all the document filing requirements of individual debtors. 

  Chapter 7 Court Filing Fees

The courts must charge a $299 case filing fee, however, individual debtors may pay in installments or may have it waived.

If the debtor's income is less than 150% of the poverty level (as defined in the Bankruptcy Code), and the debtor is unable to pay the chapter 7 bankruptcy fees even in installments, the court may waive the requirement that the fees be paid. 28 U.S.C. § 1930(f). 

Most if not all of the full-service bankruptcy preparation companies, provide the court fee waiver as part of their chapter 7 bankruptcy preparation services. Our Recommended Chapter 7 Bankruptcy provide fee waivers and they are: Miller Bankruptcy Group, Bridgeport American, ZMT Bankruptcy, USA Bankruptcy Associates, EasyBkServices.com. Debtor Aid. 

In order to complete the Official Bankruptcy Forms that make up the petition, statement of financial affairs, and schedules, the debtor must provide the following information: A list of all creditors and the amount and nature of their claims; The source, amount, and frequency of the debtor's income; A list of all of the debtor's property; and A detailed list of the debtor's monthly living expenses, i.e., food, clothing, shelter, utilities, taxes, transportation, medicine, etc. 

Among the schedules that an individual debtor will file is a schedule of "exempt" property. The Bankruptcy Code allows an individual debtor (4) to protect some property from the claims of creditors because it is exempt under federal bankruptcy law or under the laws of the debtor's home state. 11 U.S.C. § 522(b). 

Many states have used a provision in the Bankruptcy Code that permits each state to adopt its own exemption law in place of the federal exemptions. In other jurisdictions, the individual debtor has the option of choosing between a federal package of exemptions or the exemptions available under state law. So, whether certain property is exempt and may be kept by the debtor is often a question of state law. 

The debtor should consult an attorney to determine the exemptions available in the state where the debtor lives. If you use one of our recommended full-service bankruptcy preparation companies, you will receive all the necessary chapter 7 bankruptcy forms. Our Recommended Chapter 7 Bankruptcy Providers: Miller Bankruptcy Group, Bridgeport American, ZMT Bankruptcy, USA Bankruptcy Associates, EasyBkServices.com. 

Married individuals must gather this information for their spouse regardless of whether they are filing a joint petition, separate individual petitions, or even if only one spouse is filing. In a situation where only one spouse files, the income and expenses of the non-filing spouse are required so that the court, the trustee and creditors can evaluate the household's financial position. 

Filing a petition under chapter 7 bankruptcy automatically stops most collection actions against the debtor or the debtor's property. 11 U.S.C. § 362. But filing the petition does not stay certain types of actions listed under 11 U.S.C. § 362(b), and the stay may be effective only for a short time in some situations. The stay arises by operation of law and requires no judicial action. As long as the stay is in effect, creditors generally may not initiate or continue lawsuits, wage garnishments, or even telephone calls demanding payments. The bankruptcy clerk gives notice of the bankruptcy case to all creditors whose names and addresses are provided by the debtor. 

Between 21 and 40 days after the petition is filed, the case trustee (described below) will hold a meeting of creditors, also called the trustee hearing. If the trustee or bankruptcy administrator schedules the meeting at a place that does not have regular trustee or bankruptcy administrator staffing, the meeting may be held no more than 60 days after the order for relief. Fed. R. Bankr. P. 2003(a). 

The debtor must attend the meeting and answer questions regarding the debtor's financial affairs and property. 11 U.S.C. § 343. If a husband and wife have filed a joint petition, they both must attend the creditors' meeting and answer questions. Within 10 days of the creditors' meeting, the U.S. trustee will report to the court whether the case should be presumed to be an abuse under the means test described in 11 U.S.C. § 704(b). 

Before filing, you can take a free means test at ZMT Bankruptcy. 

Having a lawyer does not exempt the debtor from the trustee hearing and the attorney cannot answer the questions fopr the debtor. Fortunately, the questions are few and easy and usually over in minutes. It is necessary for the debtor to work with the trustee and to provide any records or documents that the trustee requests. 

The Bankruptcy Code requires the trustee to ask the debtor questions at the meeting of creditors to ensure that the debtor is aware of the potential consequences of seeking a discharge in bankruptcy such as the effect on credit history, the ability to file a petition under a different chapter, the effect of receiving a discharge, and the effect of reaffirming a debt. Some trustees provide written information on these topics at or before the meeting to ensure that the debtor is aware of this information. 

In order to preserve their independent judgment, bankruptcy judges are prohibited from attending the meeting of creditors. 11 U.S.C. § 341(c). In order to accord the debtor complete relief, the Bankruptcy Code allows the debtor to convert a chapter 7 bankruptcy case to a case under chapter 11, 12, or 13 (6) as long as the debtor is eligible to be a debtor under the new chapter. However, a condition of the debtor's voluntary conversion is that the case has not previously been converted to chapter 7 bankruptcy from another chapter. 11 U.S.C. § 706(a). Thus, the debtor will not be permitted to convert the case repeatedly from one chapter to another. 

In conclusion, chapter 7 bankruptcy filing is the most beneficial type of bankruptcy most people can file. It erases or discharges all of your usual dents, except child and spousal support and it does not matter how much you actually owe. 

Avoid chapter 7 bankruptcy software since most of them are nothing more than the free bankruptcy forms that anyone can download for free from the court web sites. They deceptively sell them as software instead of what they really are. 

You can tell them because they are usually priced around $49.99. Use an attorney if you can afford it or use the next best thing which are full-service bankruptcy preparation companies who give you the same documents as attorneys, except for legal advice. 

Be sure to read our article on full-service bankruptcy preparation companies. Our Recommended Chapter 7 Bankruptcy Providers are: Miller Bankruptcy Group, Bridgeport American, ZMT Bankruptcy, USA Bankruptcy Associates, EasyBkServices.com. Debtor Aid.