Michael D. Hart, P.C.

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How to file for Chapter 7 bankruptcy

| Feb 27, 2019 | Chapter 7 Bankruptcy |

Chapter 7 bankruptcy may help Virginia residents and others seek relief from debt. The process begins by filing paperwork that outlines the debts and assets a person has. Debtors may also be required to produce pay stubs and other financial information to the bankruptcy court. Documents needed to petition for protection from creditors can typically be obtained for free. Prior to doing so, an individual will need to take part in a credit counseling session.

A credit counselor can discuss options other than bankruptcy that could help a person better manage his or her finances. In some cases, a debtor may not know that other options exist without talking to a financial professional. Credit counseling sessions can be conducted online, over the phone or in person.

Another important step in the process of filing for Chapter 7 bankruptcy is passing the means test. This requirement was added in 2005 and is used to determine if an individual has the ability to repay existing debts. Generally speaking, a person passes the means test if that individual has an income below the median for the state. Those who are unable to pass this test will likely have to file for Chapter 13 bankruptcy instead. However, there are some scenarios in which a person can file for Chapter 7 protection despite not meeting the income requirement to do so.

Filing for Chapter 7 bankruptcy may make it easier to get out from under medical, credit card or other debts. Those who file are generally granted an automatic stay of creditor contact or collection activity. This means that a person may be able to avoid losing property that is exempt under bankruptcy law. Debtors may be able to have their cases discharged without paying creditors the full amount owed.