One type of filing a consumer can do for protection from creditors is a straight bankruptcy, also known as Chapter 7. In this type of bankruptcy you are not required to enter into a repayment plan to pay toward your creditors. Instead, you will receive a “discharge” of your debts (with a few exceptions, which are discussed elsewhere). By “discharge”, that means your debts are no longer legally enforceable, as though they no longer exist. With this, no lawsuits or collection activities are permitted.
In general, to be eligible for a Chapter 7 bankruptcy filing, you must at a minimum meet the following criteria:
-no prior Chapter 7 discharge from a case filed less than eight years ago
-no prior Chapter 13 discharge from a case filed less than six years ago
-have household income at or below your state’s median income (the median income for a household of four in Ohio is currently $73,040.00, and in Kentucky $64,230.00).
NOTE: If you are not very far above median income, you still might be eligible for a Chapter 7 bankruptcy, but detailed financial calculations involving your income and expenses would need to be completed.
If you are not eligible for a Chapter 7 bankruptcy, you might still qualify for a Chapter 13 debt repayment filing. Also, it might be advantageous to file Chapter 13 instead of Chapter 7, or otherwise advisable not to file Chapter 7. (See Page 4 of this website for a more detailed discussion of Chapter 13.)
Before the Chapter 7 bankruptcy petition can be filed, you will need to provide to your counsel copies of numerous documents that are required for the preparation of the petition, including, but not necessarily limited to: pay stubs or other proof of income for the six months before filing, deeds and mortgages on real estate, titles or memorandum titles for automobiles, recent tax returns, insurance policies, bank statements, and retirement account statements. If you are considering bankruptcy you should begin keeping your paystubs and bank statements at this time.
About thirty to forty days after the petition is filed, you will meet with an attorney appointed by the Bankruptcy Court, called a “Trustee”. This person will interview you under oath to verify that the information in the petition is truthful and accurate. The Trustee will also review several of the above-listed documents to verify the accuracy of the information. Provided there are no problems, your discharge order will be mailed to you about three months after this meeting. Again, provided there are no problems, you will not be required to appear before a Judge at any time.
