Steps To Take Before Filing For Chapter 7 Bankruptcy

Everyone faces tough financial times, some of which are short-lived and others that are more severe. If you are in a financial crisis, and filing Chapter 7 bankruptcy is your best move forward, securing an attorney is the first step you should make. However, there are several other important things that you need to do prior to filing for bankruptcy. 


  1. Determine Eligibility

To qualify for a discharge in Chapter 7 bankruptcy, you may have to meet certain standards. Look at your average gross income during the six months preceding your filing and then compare it to your median income for your family’s size in your state. If the gross income is more, then you may qualify. If it isn’t then you subtract allowable expenses from that income to determine if you qualify for Chapter 7 bankruptcy.


  1. Organizing Debt

In Chapter 7 bankruptcy, there are some types of debt that are not dischargeable or wiped clean, such as many student loan balances, child support obligations, recent tax debt, among others. You will want to have your debt organized in a manner that allows you to determine what you should pay when in order to keep creditors from moving forward on collecting any collateral you may intend to pledge in the bankruptcy.


  1. Look Closely At Secured Debts

When personal property is pledged as collateral for a loan, which is typical for any mortgage and many business loans, the loan must be paid to the creditor if you intend to keep the property. In bankruptcy, you have to decide if you want to pay the creditor the current value of the property in one lump payment, or agree to continue to pay as your existing contract stands. You also will have the option to surrender the property to the creditor, among other possibilities as the law allows. 


  1. Property Exemption

There are certain types of property or property cases that you may be entitled to keep when filing for Chapter 7 bankruptcy. These properties can include retirement accounts, reasonable vehicles, home equity, and household items. You will want to be sure that you are able to protect everything that you want to keep before you actually file. Listing out items can help you get a better picture of where you stand and what you need and what you can live without. 

The most important thing to remember is that your bankruptcy attorney will assist you every step of the way, from initial preparation to determine if filing for Chapter 7 bankruptcy is the right path for you, to navigating the entire process. Hedtke Law Firm is here for you when you are facing important choices regarding bankruptcy, contact us today for more information on our services.