Common Things to Know Before Filing Chapter 7 Bankruptcy

Posted on: 8 February 2022

Before filing for Chapter 7 bankruptcy, it's vital to research to get things right. This will equip you with the basic information you need to navigate your options. Hiring a chapter 7 bankruptcy lawyer also comes in handy because they'll answer all your questions and develop the best strategy to help you get a favorable outcome. 

These professionals understand the ins and outs of chapter 7 bankruptcy law and will help make the experience less stressful. So, how do you prepare adequately even if you are working with a lawyer? Here are a few things to keep in mind.

When Is the Best Time to File for Chapter 7 Bankruptcy?

Knowing the basic warning signs that it's time to file Chapter 7 bankruptcy will help you make the decision at the right time. You should consider filing if you have minimal or no disposable income, your debts exceed your half-annual income, or it would take you several years to pay off the debts you have accumulated. 

This option is also viable if your monthly earnings are below your state's median level or the obligations create pressure in vital aspects of life like your sleep or relationships. So, if you have noticed any of these signs, don't hesitate to file for Chapter 7.

What Documents Will You Require While Filling in Chapter 7 Forms?

Filing for bankruptcy isn't easy. You will need to spend a lot of time providing documentation and filling out the necessary forms. Knowing the essential items you need to file will make your work easier. For example, you will need voluntary petitions, a financial affairs statement, and schedules. You'll need to share your financial records for the past few years, including your property information, income, debts, expenditures, and expenses. 

If you have hired a lawyer, you should bring copies of all these documents during the initial consultation. This will enable the Chapter 7 bankruptcy lawyer to assess the case and prepare adequately. They'll also thank you for being a thoughtful client and know you are committed to getting a favorable outcome.

What Steps Should Be Taken While Preparing for Chapter 7?

A standard protocol is to be followed a few months before filing for bankruptcy. For instance, you shouldn't pay creditors, acquire new debt (through a loan or running up credit card balance), make unusual transitions, touch retirement funds, or fail to disclose important financial information. Also, filing for Chapter 7 isn't recommended if you are expecting to receive a lot of money that can cover your debts. If you don't adhere to these instructions, you'll undermine your efforts.