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How is Chapter 7 bankruptcy initiated?

Bankruptcy is a complicated process. Yet it is one that may be well worth the work and the wait, as a successful bankruptcy claim may allow an individual to escape burdensome debt and find a fresh financial start. This is especially true for those who successfully seek Chapter 7 bankruptcy, which is also commonly referred to as liquidation. But how is the process initiated?

First, a debtor must file a bankruptcy petition. There is a filing fee associated with filing, but the petition must be filed to get the process started. Second, schedules detailing the filer’s assets and liabilities must be submitted to the court, along with documentation showing his or her income and expenses. Additionally, the debtor must file a statement of financial affairs and detail any executory contracts and expired leases. Tax returns must also be submitted to the assigned trustee. Those with personal debt must also submit documentation illustrating that they have completed credit counseling, which must be completed within a certain timeframe.

Each of these documents must be highly detailed, giving the court a clear look into the financial situation before it. Failing to be accurate and thorough could lead to unwanted consequences, including dismissal of the case. Therefore, it is critical that those seeking bankruptcy fully understand what they need to do in order to be in compliance with the law, which will also help them have the best chance possible of moving their case towards successful closure.

With the complications involved, many Wisconsin residents may need legal assistance. Bankruptcy attorneys stand ready to help them fight for debt relief.

Source:¬†United States Courts, “Chapter 7 – Bankruptcy Basics,” accessed on Dec. 7, 2015

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