Proven Trial Litigation. Cost-Effective Representation. Cutting-Edge Legal Solutions.

Cutting-Edge Legal Solutions.

What is needed to start a Chapter 7 bankruptcy proceeding?

On Behalf of | Sep 29, 2022 | Bankruptcy

Many people in California have debt and for some, it can be overwhelming. There are many reasons why people fall into this type of debt, but often, it stems from events that are outside of their control. Chapter 7 bankruptcy can offer an opportunity for people to rid themselves of overwhelming debt, but in order to receive the benefits of the bankruptcy, people need to know how to start the proceedings.

The first step is determining whether they are in fact eligible for Chapter 7 bankruptcy. Given that much of their debt will be discharged after the process, there are eligibility requirements that people need to meet. Generally, people are eligible if their monthly income is less than the state median monthly income.

Eligibility and documentation needed for Chapter 7 bankruptcy

If their monthly income is greater than the state median, they must pass a means test. Under this test, their monthly income must be less than 25% of their nonpriority unsecured debt (up to $15,150) or $9,075, whichever is greater. However, people may still be eligible if their income is greater, if they can demonstrate special circumstances.

Once people determine whether they are eligible, next they must complete and file the bankruptcy petition. In addition to completing the petition, they must also file a list of their assets and debts; documentation regarding their current income and their current expenses; a statement about their current financial situation and a list of all contracts that they are bound to and any current leases that they are under.

People in the Sacramento area may be hesitant to file for bankruptcy because they are concerned about how it may affect their future. However, it can be a good way for some people to achieve a fresh start when they may think they will never be able to rid themselves of their debt. When people are ready to file for bankruptcy, it is important that it is done correctly to ensure success. Experienced attorneys understand what is needed for a Chapter 7 bankruptcy filing and may be able to help one file everything correctly.