If you feel like debt has taken over your life and you have no idea how to get your finances in order, you’re certainly not alone. Luckily, there are numerous ways to achieve financial freedom through debt counseling, debt settlement, and of course, bankruptcy. However, filing for any types of bankruptcy can be complicated because of how much paperwork is involved throughout the entire process. If you need help filing for bankruptcy and gathering the documents needed to file Chapter 7, bankruptcy attorneys at O’Bryan Law want to help. Call us today at 502-400-4020 to schedule a free consultation.
What is Chapter 7 Bankruptcy?
The chapter names involved in bankruptcy proceedings come from the chapters where they appear in the federal bankruptcy legal code. “Liquidation bankruptcy” is another name for Chapter 7. The idea is to get rid of unsecured debt that has become uncontrollable from medical bills, credit card debt, unsecured loans, and other debts. A Chapter 7 bankruptcy provides the most comprehensive relief from overwhelming amounts of debt.
What Are the Documents Needed to File Chapter 7?
Filing for bankruptcy is a complicated process that requires you to gather dozens of documents to give a complete picture of your life, finances, assets, debts, spending, and more. Organizing your paperwork is crucial if you want to have a smooth bankruptcy process. So here’s a list of paperwork you need to gather and prepare.
In Chapter 7, most bankruptcy trustees will ask for at least two years of tax returns because it verifies your income. However if someone is filing for Chapter 13 bankruptcy, trustees require four years worth of tax returns. If you failed to file taxes in the last two years, your trustee will require you to file and then provide copies.
On top of tax returns, you will also need copies of pay stubs and your last two W-2’s to verify your income. If you receive income from other sources such as Social Security funds, disability, or rental properties, you must provide proof of those as well.
Mortgage Statements and Proof of Real Estate Fair Market Value
If you own real estate, you must show proof of your property’s fair market value. Depending on the amount of equity or district guidelines, you can choose online valuation, a broker’s price opinion, or a full appraisal.
Additionally, you need to provide mortgage statements that show current loans and payments. Some trustees may ask you for the deed of trust and your home insurance as well.
Vehicle Registration, Proof of Value, and Insurance
Bankruptcy trustees will also require proof of ownership for any cars you own along with proof of your car’s value. Similarly to mortgage statements, you will also have to provide a recent loan statement if you have a car loan. The loan statement needs to show how much you owe and how much you’re paying monthly. Some trustees will also ask for a copy of your registration and proof of insurance.
Possibly the most important documents needed to file Chapter 7 are your financial records so that you can prove that you can’t pay your bills. Courts also want to make sure you’re not hiding money that you could use to pay off debt. Make sure to bring copies of:
- Bank statements from the last few months
- Most recent bills from creditors
- Bills or invoices from large payments from the last year
- Retirement statements
- Documentation that someone owes you money and the payments they’re making to you
Another important part of filing for bankruptcy is obviously proving that you are who you are. Your trustee will likely ask for your driver’s license and your social security number.
Proof of Alimony or Child Support
Alimony or child support payments can be a significant cause of overwhelming debt and, therefore, inability to pay off debt. Because of this, you will need to provide proof of alimony and child support payments. A certified copy of your court order will do the job.
Credits and Debts
Other crucial documents needed to file Chapter 7 is proof that you’re in debt. This means you need to show proof of debts from medical bills, student loans, credit cards, and more. Your trustee will notify your creditors of the bankruptcy proceedings and will be able to represent themselves. That means the court will need to know who your creditors are and how much you owe them in order to proceed.
List of Assets
In Chapter 7 bankruptcy, you must sell many of your assets in order to pay off your debts. Because of this, you need to be transparent about your current valuable assets to your trustee. In Kentucky, you can keep up to $3,000 worth of household assets like furniture, jewelry, clothes, and more. But in Ohio, you can keep $12,625 worth of household items as long as each singular item is worth less than $600.
A bankruptcy trustee may also ask for a list of your monthly expenses such as groceries, rent, subscriptions, and more. This information can help courts decide whether or not you can pay off your debts.
If you have a bankruptcy attorney on your side, you will need to provide documentation of any legal history or pending litigation. Additionally, any pending litigation or current court order will help trustees determine how much you can afford to pay creditors.
Proof of Credit Counseling
Lastly, you need to provide proof of credit counseling. A credit counseling course teaches you how to manage your money once Chapter 7 gives you a fresh start. Money management skills are crucial in staying debt free forever so you won’t have to potentially go through bankruptcy again.
What Additional Documents Does a Trustee Need for Chapter 7?
On top of all of the necessary paperwork to file for Chapter 7, trustees also need specific documentation to investigate your bankruptcy filing. For example, your trustee may request:
- Profit and loss statements and proof of liability insurance if you own a business
- Pictures and approximate values of your rare and antique items
- A marital settlement agreement or divorce order if applicable
What Documents do Trustees Need After Filing for Chapter 7?
Once you finish filing for Chapter 7 bankruptcy, you must provide even more paperwork because the court will need verification that the information in your petition is accurate. Here’s a list of paperwork you’ll need after filing for Chapter 7:
- 60 days of paycheck stubs or other proof of income from your employer
- The most recently filed tax return
- 60 days of bank statements
- A debtor’s education course completion certificate
- Paperwork showing that you’ve hired a bankruptcy attorney
This paperwork is due at least seven days before your 341 meeting (also called the creditors’ meeting) that all bankrupt people must attend. It’s best to submit this paperwork as soon as possible because:
- Some trustees reward those who submit paperwork early by hearing their cases first. Trustees will likely meet with late paperwork submitters last.
- Your trustee can handle any issues that arise in your bankruptcy process quickly and smoothly when you get ahead of the game. Resolving issues before the 341 meeting is key for avoiding a continuance and prevent unnecessary delays.
What if I Lose Documents in a Natural Disaster?
This may sound like a random scenario that doesn’t need a second thought, however filing for bankruptcy following a natural disaster is very common. Not only are jobs and property lost during a natural disaster, but the documents needed to file Chapter 7 are lost too. Luckily, bankruptcy trustees prepare for situations like this. When a bankrupt person loses their paperwork, a trustee will:
- Avoid taking action against a bankrupt person who can’t provide necessary documents
- Grant reasonable requests to ease filing requirements
- Consider a decrease in income or an increase in expenses
Call a Bankruptcy Attorney Today
Filing for bankruptcy is already complicated. What makes it even more complicated is the documents needed to file Chapter 7. Whether you’re filing for Chapter 13, Chapter 7, LLC bankruptcy, or you just need help organizing your paperwork, O’Bryan Law attorneys are here for you. We have offices in Louisville, Frankfort, and New Albany. Contact us at 502-400-4020 for a free consultation.