Documents needed for filing Chapter 7 bankruptcy
When you determine you will be filing for Chapter 7 bankruptcy, being prepared is of the utmost importance. Navigation through the Bankruptcy Code has become more complex in recent years and has made it more difficult for a debtor to file for Chapter 7 bankruptcy. In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) was enacted to discourage unwarranted bankruptcies and protect both creditors and consumers. However, because of the BAPCPA, there are extensive documentation requirements, debt/income qualifications, and responsibilities the debtor must fulfill to file for bankruptcy at all. For these reasons, it is always best to hire a bankruptcy attorney to help get you through the bankruptcy process.
The Credit Counseling Requirement
With the enactment of the BAPCPA, it is now required that all debtors filing for bankruptcy must have first attended a credit counseling class. The certificate of completion of this class will be filed with your petition for bankruptcy. The class is low cost, with $50 being the maximum amount the law allows a debtor to be charged, and in some circumstances the fee for the class can be waived. During this class, a credit counselor will review and assess the debtor’s financial situation and recommend solutions for getting out of debt. This class must be taken within 180 days prior to filing your petition.
A List of All Your Debts
Before filing, you must also compile a list of all of your debts. This list will need to include creditors, lien holders, and even friends or family who have given you personal loans. An easy way to go about getting most of this information is to request copies of your current credit reports. Many debts with the current amounts owed will be listed on these reports and can make the creation of your list much easier. The three major credit reporting agencies are Equifax, TransUnion, and Experian. It is important to obtain a credit report from each of these agencies, as different debts can be listed on each. For the rest of your debt information, you will need to make use of your personal records to ensure your list of debts is complete. It is very important that every debt is accounted for because, if you forget a debt and your bankruptcy is completed, that debt will not be a part of the bankruptcy discharge and you will be held liable for the full amount owed.
Documentation Proving Your Income and Monthly Expenses
When filing for bankruptcy, you will also need to provide documentation proving your income. To substantiate your income, you will need to provide the last seven months of pay stubs, income statements, and the last two years of your tax returns, if filed. These documents will not only verify your income, but will be used to determine whether you are even eligible to file for Chapter 7 in the first place (via the “means test”). Along with the proof of your monthly income, you must also report your monthly expenses.
Documentation Regarding the Value of your Assets
Documentation regarding the value of your assets is also required when filing for bankruptcy. When determining the value of your assets, you will value them at what they are worth now, not what you bought them for. The easiest route is to hire an appraiser to perform an appraisal; however, if you can’t do this, you must be able to prove the value you have determined is “fair market value.” Your assets will include your household items, real property, and any items that may be sold to pay creditors. Additional items which must be valued as assets include stocks, retirement accounts, and business interests. To ensure that you report everything required, confer with your bankruptcy attorney.
Whether or not you are a party in a pending lawsuit
You will also need to disclose to the Bankruptcy Court whether or not you are a party in a pending lawsuit or have been a party to a lawsuit in the last year. It will also be necessary to report the current status of these legal matters. This is important because in the event the lawsuit is still pending when you petition for bankruptcy, an automatic stay will be granted on the proceedings and your debt, if any, in the lawsuit may be included in your bankruptcy.
Because filing for Chapter 7 has gotten more and more complex since the laws have changed in 2005, it is always important to seek counsel from a licensed and seasoned bankruptcy attorney before filing. The attorneys here at Clark and Washington will be more than willing to help you make sure you meet all of the requirements to file and direct you though the intricacies of the Chapter 7 bankruptcy process.
