Memphis residents can consider filing for Chapter 7 bankruptcy when their debts become overwhelming. This type of bankruptcy wipes out several forms of debt, including medical bills and credit card debt. People choose this type of bankruptcy because it offers a fresh start financially.
There are several steps to filing for Chapter 7 . The first step involves determining if you’re eligible to file.
Qualify for Chapter 7
The Chapter 7 means test determines if you qualify for Chapter 7. The test determines if you have enough income to repay your debts. Your income, family size and expenses are reviewed. If you meet the requirements to file for Chapter 7, then you can proceed to file.
Credit counseling is mandatory. An approved nonprofit credit counseling agency must provide the counseling within 180 days before you file. The counseling teaches you options for creating a budget and managing debt.
Get financial documents
You’ll need documents that show your income, assets, debts and expenses. Pay stubs, bank statements, and tax returns are recommended.
File the paperwork
You’ll need to submit a petition for filing Chapter 7 with your local bankruptcy court. The petition asks for details about your income, expenses, financial situation, debts and assets.
Meet with creditors
The Meeting of Creditors is between you, your creditors and your bankruptcy trustee. Creditors aren’t required to attend the meeting. The trustee and creditors use this meeting to ask questions and review your bankruptcy petition.
Complete debtor’s education
A financial management course provided by an approved provider is required. If you don’t complete this course, your Chapter 7 petition will not get discharged.
Get your debts discharged
Once you’ve completed all the steps, you’ll receive a discharge of your debts. Your debts are forgiven, and you can start rebuilding your credit.
Pros and cons of Chapter 7
Chapter 7 provides relief when your debts are too much to bear. But it remains on your credit report for 10 years. It’ll take time to rebuild your credit, but it’s possible with your new start. And some debts, such as child support and back taxes, aren’t discharged via Chapter 7.