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What You Need to File Chapter 7 Bankruptcy

Aug. 9, 2021

In order to have a successful Chapter 7 case, you need to do your part in providing us with the information and documentation required by the bankruptcy laws. The following is a brief list of what we will need from you so that we can move forward with successful filing and completion of your case.

Proof of Income for The Last 6 Months

The bankruptcy law requires that we provide proof of all sources of income for the 6 months before you file your bankruptcy. This includes income from all sources, including, but not limited to the following items:

  1. Pay stubs

  2. Proof of Unemployment Income

  3. Proof of Social Security Income

  4. Proof of Child Support

  5. Proof of food stamps

  6. Proof of disability income

  7. If you are self-employed, we need documentation of your income from all available sources and all other proof that you can supply, including profit and loss statements, bank statements, and other business records.

  8. There is a rule that requires each and every pay stub and other proof of income for the 6 month period before your bankruptcy has been filed. By way of example, if we file your bankruptcy on July 1, in addition to the above, we need proof of all income for the period from January 1 through June 30.

All of this information is required before your case can be filed with the Court.

Tax Returns for The Last Two Years

We need a copy of your tax returns for the years 2020 and 2019. This is required in order for your case to be filed with the Court.

If You Own Real Estate, the Following Is Required:

  1. Proof of your mortgage payments.

  2. Proof of the mortgage pay-off – meaning, the amount of money you would have to pay the mortgage company to pay off your mortgage in full. This is required for each mortgage on your home or any other real estate that you own.

  3. Proof of the value of all real estate that you own. This includes timeshares, vacant land, and condos. The Court will usually require what is called a comparative market analysis. These normally cost about $100.00.,Sometimes you can get one for a little less. For Cumberland County clients, we normally recommend John Randanella because he has very good credentials. He charges $100. If you want to contact him, his phone number is 825-9517. If you get a recording, leave a detailed message and he will get back to you promptly. Proof of the value of all of your property by way of market analysis is needed before your bankruptcy can be filed with the Court.

  4. We need a copy of the deed for every property that you own.

It is very important that we have documentation of the value of your property and the payoff of each mortgage. The main reason for this is because, in order to wipe out your unsecured bills in a Chapter 7, you normally have to demonstrate that you do not have more than about $25,000 equity per owner in your residence. The amount of equity you are permitted to have in nonresidential property is much lower.

If you have more equity in your real estate than permitted by the bankruptcy laws, it may not be helpful for you to file chapter 7, and you might be better off filing a chapter 13 plan to repay some of your unsecured creditors. If this situation applies to you, we will discuss with you in detail the various legal options you have.

Credit Counseling and Debtor Education Program

Credit counseling must be completed before your bankruptcy is filed. The charge for credit counseling before bankruptcy is usually about $10.00. It is usually very simple and straightforward, and it normally can be done on the internet or by a phone conference that takes about 45 minutes. Credit counseling can also be done online. This session must be done anytime within 180 days before your bankruptcy has been filed. You can even do the counseling session on the same day that your bankruptcy is filed, as long as the counseling session is completed and you get a certificate of completion. After that, we can file the bankruptcy for you.

You also have to complete a debtor education program which costs about $20.00 and which is also very straightforward. If you don't do this before your bankruptcy is listed for discharge (usually within 90 days after your chapter 7 bankruptcy petition has been filed), your bankruptcy case can be dismissed without a discharge, and it would be quite costly to reopen your case, so you must make sure to complete the debtor education program. This is very important. If you don't get a discharge, your creditors can come after you and you have wasted time and money by being in bankruptcy.

Requirement to Pay Mortgage Payments

If you are making mortgage payments, you are required to keep up with all regular mortgage payments after your bankruptcy has been filed, unless you are surrendering your property.

Requirement to Pay Car Payments

If you are making car payments outside of your bankruptcy, you must continue to make those car payments on time, unless you choose to surrender the car and be released of the debt.

Rent Payments

If you are making a rent payment outside of your bankruptcy, you must continue to make these payments on time.

Child Support Payments

Regular child support payments must be made on time after you file for bankruptcy.

Personal Injury Claims, Malpractice Claims, and Other Law Suits

If you have a lawsuit pending or a possible lawsuit that you intend to pursue when you file your bankruptcy, this must be disclosed in the bankruptcy petition and you must let us know. These items are considered assets that we have to disclose to the bankruptcy court. Failure to disclose the existence of these claims can lead to dismissal of your bankruptcy case and denial of a discharge, meaning that you will not be protected from your creditors.

Please be sure to let us know of any personal injury claims, malpractice claims, or other claims (such as if people owe you money) that you are pursuing or intend to pursue where you might get money in the future.