Step 3: Chapter 7 Bankruptcy Overview and Options:
Okay, let's say that you can't negotiate a deal on your own with the attorney handling a collection case against you and there is no money left in the coffers to pay your debts. It's probably time to discuss Bankruptcy with a lawyer. Consumers typically have 2 bankruptcy options within the United States Bankruptcy Code. (11 U.S.C. §101 is the starting point if you are wanting to do your own research). A Chapter 7 Bankruptcy, commonly referred to as a Liquidation, or "fresh start" bankruptcy and a Chapter 13 Reorganization are the 2 consumer related bankruptcies.
Since I deal with Chapter 7 Liquidation bankruptcies, I will explain that option in greater detail as we blog on. I usually advise clients that if they have sufficient disposable income after reducing their necessary expenses then they likely will NOT qualify for a chapter 7 bankruptcy, OR if their household income level is above the Missouri Census Median Income level then they will likely only qualify for a Chapter 13 Reorganization bankruptcy. (The Means Test Calculation does have a provision that allows for households with higher than average incomes to still qualify in certain circumstances).
When filing a Chapter 7 Bankruptcy in Missouri, the Petition and "Schedules" must be completed and filed in the U.S. Bankruptcy Court. If filing in or around Kansas City, Missouri, then your Chapter 7 Bankruptcy Petition and Schedules will be filed in the United States Bankruptcy Court for the Western District of Missouri Upon filing, a trustee is then appointed to oversee the Bankruptcy Estate.
There is much preparation done prior to filing the Chapter 7 Bankruptcy. Because ALL assets and ALL debts MUST be disclosed, without exception, it is important to review and double check and triple check that the Schedules are accurately completed. The trustee will also need verification of certain income/asset information. Specifically, trustees typically require turning over 2 years of Federal and State Income Tax Returns, 30-60 days of Bank Records from any financial institution that you hold funds, Retirement information, Real Estate Deeds, W-2's for prior year or at least the immediate preceding 6 months of Pay stubs from all employers. It is a good practice to have this information ready for turnover to the trustee at the same time as filing your Chapter 7 bankruptcy because there are deadlines associated with the turnover of this information.
For information concerning forms and other Chapter 7 Bankruptcy related materials, you can visit the Official United States Court webpage.