The most common form of bankruptcy relief is Chapter 7. Most consumers who find they are facing overwhelming debt find this is the best option for their needs since it allows them to get a completely fresh start if they qualify. These are the steps you need to take to file a Chapter 7 bankruptcy.
Step One: Obtain Your Credit Report – Walker & Walker does this for you FOR FREE
Since your credit report contains a full list of who you owe money to, it is important you request your free credit report. This will help you and your bankruptcy attorney prepare your petition for bankruptcy to present to the court. Review your report for errors and for missing information as you do not want to leave creditors off your petition.
Step Two: Gather Income Verification
Copies of your last two tax returns and copies of your most recent pay stubs will help you fill out the necessary forms for Chapter 7 bankruptcy. Your bankruptcy attorney will need to have complete information on all income including wages, interest income and any other income you are receiving in order to help you determine if you qualify for Chapter 7 bankruptcy.
Step Three: Document Your Assets
You must declare your assets when filing a bankruptcy petition. Before you meet with a bankruptcy attorney you should list all your assets including retirement accounts, life insurance policies, home, furnishings, jewelry and bank accounts. Your attorney will need this information to help you complete the means test for Chapter 7.
Step Four: Take the Online Credit Counseling Course
Chapter 7 bankruptcy requires you to complete a credit counseling course. The list of approved credit counselors for Minnesota is available from the Department of Justice. Your bankruptcy attorney can help you find the right counselor for your needs. Walker & Walker has a special discount code, so that you don’t have to pay for the class and it can be done in your own home in an hour.
Step Four: Find a Qualified Minnesota Bankruptcy Attorney
Once you have gathered all information you need to prepare a bankruptcy petition, you need to find an attorney who handles Minnesota bankruptcies and will work closely with you throughout the process. The right bankruptcy attorney will assist you with your filing as well as help you rebuild your credit once your Chapter 7 is discharged.
What You Should Do and What to Avoid
There are some things you should use caution with if you are considering filing for bankruptcy. First, do not attempt to open new credit lines because that will be a red flag when you file bankruptcy. You should also avoid spending any available credit particularly on non-necessary items like televisions, etc.
We have often seen people who have drained their retirement accounts hoping to pay down some of their debt. However, if you are considering filing Chapter 7 bankruptcy you should know that your retirement account will likely be exempt from liquidation so you should leave those funds in your retirement account and avoid a penalty for removal.
Another thing you should avoid is transferring or selling any of your assets. This is important because your bankruptcy attorney will need to know what assets you may have sold or transferred for up to a year before you file, and this could jeopardize your filing.
You should make sure all your taxes are filed before you file for bankruptcy protection. The IRS will file a claim with the bankruptcy court for unfiled taxes and the amount they assess during the proceedings will likely be far more than what you owe.
For some debtors, Chapter 7 is the right option to escape overwhelming debt. If you are considering filing for bankruptcy, or you are uncertain what options are available to you, contact Walker & Walker Law Offices, PLLC to learn about your options and to work with a well-qualified Minnesota bankruptcy attorney.