Filing For Chapter 7 Bankruptcy Starting over

Coleman & MacDonald Law Office Once you’ve filed for Chapter 7 bankruptcy, the court will appoint a trustee to oversee your case. This trustee plays a crucial role in reviewing your bankruptcy petition and documents, identifying any non-exempt assets, and using the proceeds from those assets to pay your creditors. It’s important to remember that exemptions typically protect most assets, but some may not be fully covered. 

What Is Bankruptcy?

Bankruptcy is a legal process that allows individuals or businesses unable to repay their debts to seek relief from some or all of those debts. The person or entity filing is known as the “debtor.” Bankruptcy is governed by federal law and handled in federal courts. Filing for bankruptcy triggers an “automatic stay,”” which immediately stops creditors from trying to collect debts until the case is resolved.

Who Can File for Bankruptcy?

Most individuals and sole proprietors who owe money to creditors are eligible to file for bankruptcy, with limited exceptions. A debtor can receive a bankruptcy discharge every eight years, which erases unsecured debts, such as credit card debt, medical bills, and personal loans.

What Documents Are Needed to File?

Your bankruptcy attorney will typically need the following:

• A recent credit report
• Bank statements (last 6–12 months)
• Recent mortgage statement(s)
• Pay stubs/proof of income (last 6 months) for you (and your spouse, if applicable)
• Federal tax returns (last 2–3 years)
• Recent 401(k), pension, and insurance policy statements
• Current auto and property insurance binders
• Broker’s price opinion for any real estate

Do I Need to Take a Course Before Filing?

Yes. You must complete a credit counseling course within 180 days before filing, as well as a financial management course before your debts can be discharged. Both must be taken with approved providers—your attorney can give you a list.

• Credit counseling involves a review of your finances, exploring alternatives to bankruptcy, and developing a budget. It usually costs $10–$35 and may be free if you cannot afford it. Once completed, you’ll receive a certificate to submit to the court.
• Financial Management is a post-filing education course that focuses on budgeting and money management. As with counseling, you’ll receive a certificate upon completion.

Which Chapter of Bankruptcy Should I File?

Choosing which type of bankruptcy to file depends on your financial situation and goals:

Chapter 7 is for individuals who want to discharge unsecured debts quickly and have little to no disposable income after paying expenses. – Chapter 13 is for individuals who need to catch up on missed mortgage or car payments or who have sufficient income to follow a 3–5-year repayment plan.

We can review your circumstances together to determine the best option for you.

Chapter 7 vs. Chapter 13: Key Differences

• Chapter 7:

• • Discharges most unsecured debts (credit cards, medical bills, personal loans).

• • Not everyone qualifies—eligibility depends on income and expenses (“means test”).

• • The court appoints a trustee to oversee the case and handle any non-exempt assets.

• • Exemptions may protect most, if not all, of your assets, but some may still be at risk.

• Chapter 13:

• • Sets up a 3–5 year repayment plan to reorganize debts.

• • It enables you to keep all assets and catch up on missed secured loan payments (mortgage, car).

• • It can help stop foreclosures and repossessions as long as payments are made.

• • It may allow you to remove a second mortgage or pay certain IRS debts over time.