Running a small business on your own is already overwhelming, but when your revenue can’t keep up with your expenses, it can be hard to see the light at the end of the tunnel.
While it is always in your best interest to avoid bankruptcy when possible, it is often the only way to protect the assets you have left, and give yourself a fresh start.
Bankruptcy forms are available free of charge allowing individuals to file for Chapter 7 on their own, but without the right information, it can be difficult to do correctly. With these tips, you can confidently file a DIY Bankruptcy Chapter 7 without a lawyer, and get back to building your credit.
Find out if you are eligible
Analyze your debt
Make sure all of your debt can be charged under Chapter 7. Some debts, including child support, court judgments for injuries, student loans, and the last three years of past due income tax are not eligible. Consult this list and calculate only the debts that are relevant to chapter 7.
Determine your monthly income qualification
Begin by calculating your current monthly income and making sure it is lower than the median income for a family of your size in your state. Add up your income over the last six months and divide by six to find the average. If it is less than or equal to the median number for your location, the courts will see you as eligible for Chapter 7.
If your income is too high, fill out the Means Test. Answering questions about income, assets, debts, and your household will determine if filing for chapter 7 is right for you. If you own few assets and have not been convicted of fraud, you are probably in a good position to file a DIY Chapter 7 Bankruptcy without legal assistance.
How to file a DIY Chapter 7 Bankruptcy
1. Check for property exemptions
Each state has property exemption laws that indicate what type and how much of each property you are entitled to keep through the Chapter 7 process. Exemptions may include a percentage of equity in your home, clothing, unspent Social Security payments, and other necessities like cars and retirement income.
2. Attend the required credit counseling session
180 days before filing for Chapter 7 bankruptcy, you are required to have a briefing about credit counseling 1:1 or in a group, either by telephone or online. Here is a list of approved providers that offer credit counseling.
The counseling agency will prepare a repayment budget plan based on your income and offer insight into options for repaying the debt. Counseling is required even if a repayment plan is feasible and filing for bankruptcy is the only option. Your case is likely to be dismissed if you fail to meet the credit counseling requirement.
3. Fill out and file the forms
Luckily, all the necessary forms are available free of charge online. Beginning with the Voluntary Petition, you will start your case and have a sizeable packet to fill out and file. Consult this informative list and then download all the necessary paperwork here.
Filing for bankruptcy is more common than you think! With this guide, you can take the right steps to file for Chapter 7 bankruptcy without a lawyer, and reclaim your peace of mind.
Need more information? Access more expert knowledge for managing your debt with 13 Questions to Ask Debt Consolidation Companies.