How Hard Is It to File Chapter 7 Bankruptcy?
For most middle class individuals and families, it is not hard to file Chapter 7 bankruptcy. However, those who earn a lot of money or have too many assets will either be forced into a Chapter 13 repayment plan or compelled to give up their assets in order to qualify for debt forgiveness through Chapter 7.
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Means Testing
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Everyone filing Chapter 7 bankruptcy must pass a federal means test (see Resources below.) Those who make more than their state's median income will likely need to file Chapter 13.
Credit Counseling
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All bankruptcy filers must pursue federally approved credit counseling (see Resources below) and prove they completed a session before their papers will be accepted by the court.
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Assets
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A list of assets will be reviewed by the federal bankruptcy court during a Chapter 7 case. Retirement accounts cannot be seized to offset creditor losses, but most other assets can.
Debts
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Some debts cannot be discharged through Chapter 7 bankruptcy, including almost all student loans, taxes less than three years old, child support, court fines, and drunken driving-related lawsuits.
Time Frame
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It takes anywhere from four to eight months to finalize a Chapter 7 case, during which time no new debt can be accrued and no assets can be sold or transferred without court permission.
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