The entire process starts after extensive information gathering is completed. A document called a Bankruptcy Petition is completed containing detailed information relating to the debtor’s income, assets and debts. The debtor eventually reviews & approves of his or her petition by signing it, and immediately thereafter it is electronically filed by the debtor’s attorney.
In the Chapter 7 process, a trustee is designated by the bankruptcy court to review the assets of the debtor. The trustee determines which assets are exempt or nonexempt property. Exemption of property is restricted to debtor equity in a possession such as a car, home, or life insurance.
Once Chapter 7 bankruptcy protection has been filed by a debtor, all creditor collection activities must cease immediately. This includes harassing collection letters, phone calls, garnished wages and repossessions.
The process requires the debtor to provide documentation of the value of all assets as well as a list of all creditors, income and expenses. This documentation must be completed prior to filing. The required documentation includes the following items:
- Pay stubs for the debtor and all household members for the previous six months
- Copies of all bills and notices
- Credit report
- Valuation of all assets
- Any Child Support orders
- Federal Tax returns for the three years prior to the filing
- Also prior to the filing, the debtor must undergo credit counseling and receive a completion certificate from an approved credit counselor. This certification must be filed with the court, with the bankruptcy petition.