Don't File For Bankruptcy Without This Guide!

How to File for Chapter 7 Bankruptcy

Your guide to a fresh start!

Want to enjoy a debt-free life? Help is here.

Considering bankruptcy but can't afford to hire an attorney?  The reliable, up-to-date information in How to File for Chapter 7 Bankruptcy will help you successfully complete your bankruptcy case without breaking the bank. Find out how to:

  • determine if you qualify for Chapter 7
  • wipe out as much debt as possible
  • find out if you can keep your car, home, and other valuable property
  • Product Details
  • You don’t have to struggle with burdensome debt. By filing for Chapter 7, relief can be yours in as few as four months. How to File for Chapter 7 Bankruptcy explains the bankruptcy process in easy-to-understand language, including:

    • whether you'll qualify for a Chapter 7 discharge
    • the debts that debts get wiped out in Chapter 7
    • what property you'll be able to keep, and
    • how to retain your home or car.

    Once you’re ready to file, you’ll use the step-by-step instructions to:

    • complete the official bankruptcy court forms
    • file your debtor education course certificates
    • prepare for the meeting of creditors (the one appearance you'll make), and
    • rebuild your credit after receiving your fresh start.

    Get more than 40 additional resources, including samples of completed bankruptcy forms, fillable financial worksheets, current income and exemption charts, motions, and more. And, most importantly, if the law changes, you’ll know. Nolo provides access to legal changes on the How to File for Chapter 7 Bankruptcy updates page.

    Please note: This book does not cover business bankruptcies, farm reorganizations or individual repayment plans (Chapter 13). For Chapter 13 bankruptcy, see Nolo's  Chapter 13 Bankruptcy: Keep Your Property & Repay Debts Over Time.

    “Clear instructions on when and how to fill out the necessary forms.”-Forbes

    “Exceptionally clear…”-The New York Times

    “A do-it-yourself bankruptcy book for people who can’t afford expensive lawyers.”-Newsweek

    Number of Pages
    Included Forms
    • Current Monthly Income Worksheet
    • Personal Property Checklist
    • Property Exemption Worksheet
    • Homeowners’ Worksheet
    • Judicial Lien Worksheet
    • Bankruptcy Forms Checklist
    • Bankruptcy Documents Checklist
    • Median Family Income Chart
    • Amendment Cover Sheet
    • Notice of Change of Address
    • Supplemental Schedule for Property Acquired After Bankruptcy Discharge
    • Proof of Service by Mail
    • Pleading Paper 
  • About the Author
    • Albin Renauer

      After receiving his J.D. from the University of Michigan Law School in 1985, Albin Renauer worked for various public-interest law firms in the bay area and as a staff attorney for Chief Justice Rose Bird of the California Supreme Court.

      He spent 17 years as an editor at Nolo, where he helped create numerous books and software programs, including the bestselling Quicken WillMaker. He also edited Law on the Net, the first online directory of legal resources and was the architect of Nolo's Webby Award winning website during the dot-com boom.

      Currently, Albin is an independent web and database developer and Webby Award judge. His latest project is, an online companion to his How to File for Chapter 7 Bankruptcy designed to help debtors file for bankruptcy.

    • Cara O'Neill, Attorney

      Cara O'Neill is a legal editor at Nolo, focusing on bankruptcy and small claims. She also maintains a bankruptcy practice at the Law Office of Cara O’Neill and teaches criminal law and legal ethics as an adjunct professor. Cara has been quoted in bankruptcy, finance, small claims, and litigation articles by news outlets that include USA Today, CNBC, U.S. News & World Report, Nerd Wallet, and Yahoo Finance.

      Cara received her law degree from the University of the Pacific, McGeorge School of Law, where she graduated a member of the Order of the Barristers—a highly-selective honor society that gives national recognition to top law school graduates demonstrating excellent skills in trial advocacy, oral advocacy, and brief writing.

      Working at Nolo. Cara started writing for Nolo as a freelancer in 2014 and became a full-time legal editor in 2016. She has authored a number of Nolo self-help legal books, including How to File for Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, The New Bankruptcy, Everybody's Guide to Small Claims (national version), and Everybody's Guide to Small Claims in California. She also co-authors and edits Solve Your Money Troubles and Credit Repair and has written hundreds of articles for,,, and

      Early legal career. Before joining Nolo, Cara spent 20 years working as a trial attorney litigating criminal and civil cases. She also served as an administrative law judge mediating disputes between auto manufacturers and dealerships and began teaching law as an adjunct professor in 2004. She added bankruptcy to her practice after the 2008 financial downturn.

      Origins of litigation and writing career. Thanks to her mother, Cara’s advocacy training began early and involuntarily. In junior high school, she took second place two years running in the local Optimist Club speaking competition. She also successfully competed on her high school speech and debate team for several years, eventually serving as president of the same. During law school, she competed on a nationally ranked ABA moot court team for two years (and was recruited for a third, but declined) and served as a law journal editor.

  • Table of Contents
  • Your Chapter 7 Bankruptcy Companion

    1: Should You File for Chapter 7 Bankruptcy?

    • Bankruptcy in America: The Big Picture
    • An Overview of Chapter 7 Bankruptcy
    • Who Can File for Chapter 7
    • Does Chapter 7 Bankruptcy Make Economic Sense?
    • Alternatives to Chapter 7 Bankruptcy

    2: The Automatic Stay

    • Actions Prohibited by the Stay
    • When the Stay Doesn’t Apply
    • Evictions

    3: Your Property and Bankruptcy

    • Property in Your Bankruptcy Estate
    • Property That Isn’t in Your Bankruptcy Estate
    • Property You Can Keep (the Exemption System)
    • Selling Nonexempt Property Before You File

    4: Your House

    • How Bankruptcy Affects a Typical Homeowner
    • If You’re Behind on Your Mortgage Payments
    • Will You Lose Your Home?

    5: Secured Debts

    • What Are Secured Debts?
    • What Happens to Secured Debts When You File for Bankruptcy
    • Options for Handling Secured Debts in Chapter 7 Bankruptcy
    • Choosing the Best Options
    • Step-by-Step Instructions

    6: Complete and File Your Bankruptcy Paperwork

    • Gather the Necessary Documents
    • Get Some Information From the Court
    • For Married Filers
    • Required Forms and Documents
    • Voluntary Petition for Individuals Filing for Bankruptcy (Form 101)
    • Relating to Eviction Judgements (Forms 101A and 101B)
    • Form 106 Schedules
    • Statement of Financial Affairs for Individuals Filing for Bankruptcy (Form 107)
    • Statement of Intention for Individuals Filing Under Chapter 7 (Form 108)
    • Your Statement About Your Social Security Numbers (Form 121)
    • The Means Test Forms
    • Notice Required by 11 U.S.C. § 342(b) for Individuals Filing for Bankruptcy (Form 2010)
    • Creditor Mailing List
    • How to File Your Papers
    • After You File

    7: Handling Your Case in Court

    • Routine Bankruptcy Procedures
    • Amending Your Bankruptcy Papers
    • Filing a Change of Address
    • Special Problems

    8: Life After Bankruptcy

    • Newly Acquired or Discovered Property
    • Newly Discovered Creditors
    • Post Bankruptcy Attempts to Collect Debts
    • Attempts to Collect Clearly Discharged Debts
    • Attempts to Revoke Your Discharge
    • Post Bankruptcy Discrimination
    • Rebuilding Credit

    9: Which Debts Are Discharged

    • Debts That Will Be Discharged in Bankruptcy
    • Debts that Survive Chapter 7 Bankruptcy
    • Disputes Over Dischargeability

    10: Help Beyond the Book

    • Debt Relief Agencies
    • Bankruptcy Petition Preparers
    • Legal Research



    • How to Use the Downloadable Forms on the Nolo Website
    • List of Forms Available on the Nolo Website


  • Sample Chapter
  • Chapter 1
    Should You File for Chapter 7 Bankruptcy?

    Your first objective is to figure out whether you can—and should—file for Chapter 7 bankruptcy. This chapter will give you an overview of the bankruptcy process and help you decide whether Chapter 7 bankruptcy is right for you. In the chapters that follow, we explain how to complete the required bankruptcy paperwork, what happens to your debts and property when you file for bankruptcy, how to get help with your bankruptcy, how to pick up the financial pieces once your bankruptcy is final, and more.

    Bankruptcy in America: The Big Picture

    Although you might not care much about the larger bankruptcy picture, understanding it will help you keep your situation in perspective. For many, it’s reassuring to know that you’re not alone in your financial struggles.

    Why People File for Bankruptcy

    Studies show that the most common reasons for filing for bankruptcy are:

    • job loss, followed by an inability to find work that pays nearly as well
    • medical expenses that aren’t reimbursed by insurance or government programs
    • divorce or legal separation, and
    • small business failures.

    Once a financial catastrophe strikes, many of us wind up taking on significant debt just to weather the storm. If we saved enough, maybe we’d be ready for these unexpected twists and turns. But, for a variety of reasons, many of us spend too much and save too little. Let’s take a closer look at how we got so financially overextended.

    Why You Shouldn’t Feel Guilty About Filing for Bankruptcy

    The American economy is consumer based. A highly paid army of persuaders surrounds us with thousands of seductive messages each day that all say, “buy, buy, buy.”

    These sophisticated advertising techniques often cross the line into manipulation, and as a result, we buy. And for those of us who can’t afford to pay as we go, credit card companies offer easy credit.

    Readily available credit often makes it easy to live beyond our means and difficult to resist advertisers. If, because of illness, loss of work, or just plain bad planning, we can’t pay for the things we need, feelings of fear and guilt are often our first responses.

    If you are grappling with guilt, remember that large creditors expect defaults and bankruptcies and treat them as a cost of doing business. Banks issue credit cards because they are profitable, even though some credit card debts are wiped out in bankruptcies and never repaid.

    Bankruptcy is a truly worthy part of our legal system, based as it is on forgiveness rather than retribution. It helps keep families together, frees up income and resources for children, reduces suicide rates, and keeps the ranks of the homeless from growing even larger. In short, bankruptcy provides a chance for a fresh start and a renewed, positive outlook on life.

    What About the Downside?

    Despite its many benefits, bankruptcy also has disadvantages—economically, emotionally, and in terms of your future credit rating. The bankruptcy process can get intrusive. As part of your public filing, you are required to disclose your financial activities during the previous year or two, as well as your income, debts, and current property holdings.

    Bankruptcy also carries a certain stigma, although it has diminished greatly since the 2008 economic downturn. As a result, some people would rather struggle under a mountain of debt than accept the label of “bankrupt.”

    If you have a bankruptcy on your credit report, you might need to convince those who have business dealings with you that you made every effort to meet your financial obligations before resorting to bankruptcy. Whether you are renting or buying a home, purchasing or leasing a car, or seeking financing for a business, your bankruptcy will be counted against you, at least for several years, and will stay on your credit report for up to ten years. You’ll likely be able to get credit cards after bankruptcy; however, you will have a high interest rate, at least for a while.

    While these facts might seem like downsides, they collectively have an upside. Bankruptcy will give you a new perspective on the credit system. A bankruptcy temporarily removes you from the credit hamster wheel and gives you some time and space to learn to live credit free and to develop a more manageable relationship to the credit industry.

    Changes in Bankruptcy Law

    In October 2005, Congress passed a law that changed the way bankruptcy works. One of the purposes of this law, known as the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), was to cut down on Chapter 7 bankruptcies. Lobbyists drafted BAPCPA for the credit card and banking industries, who assumed that many would-be bankruptcy filers could afford to pay back at least some of their debt, and should therefore be required to do so.

    The hallmark of BAPCPA is what’s known as the means test—a questionnaire that helps determine whether filers have sufficient “disposable” income to fund a Chapter 13 bankruptcy plan. In general, those with higher incomes are more likely to fail the test and be forced out of Chapter 7 bankruptcy. Contrary to what the supporters of the BAPCPA thought, the vast majority of those who use Chapter 7 have little or no income to spare. As a result, many people who want to file for Chapter 7 bankruptcy can still do so.

    There were numerous additional changes in the law that make filing for Chapter 7 bankruptcy somewhat more difficult and, if you use an attorney, more expensive. But, by following our step-by-step instructions, many people will be able to handle their own cases.

    This 21st edition of How to File for Chapter 7 Bankruptcy also incorporates the many interpretations of the law handed down by the nation’s bankruptcy courts. New court decisions come out every day, from bankruptcy courts, federal district courts, bankruptcy appellate panels (B.A.P.s), federal Circuit Courts of Appeal, and even the U.S. Supreme Court. What all this means, of course, is that the day after this book hits the shelves, a new case may add some spin on a procedure or rule that you should know about. To make sure you have the most up-to-date information and forms, check this book’s companion page at

    What This Book Doesn’t Cover

    This book explains the procedures for filing a Chapter 7 bankruptcy if you are an individual, a married couple, or a small business owner with personal liability for your business debts. This book doesn’t cover:

    • Chapter 13 bankruptcy. Chapter 13 allows filers to keep their property and repay some or all of their debt over three to five years. For more information on Chapter 13, see “Pay Over Time With Chapter 13 Bankruptcy,” below. You can also get details about Chapter 13 bankruptcy in Chapter 13 Bankruptcy, by Cara O’Neill (Nolo).
    • Bankruptcy for business partnerships. If you’re a partner in a business with someone other than your spouse, filing for a personal bankruptcy
      will affect your business; we don’t address that situation in this book.
    • Bankruptcy for major stockholders in privately held corporations.
      If you’re a major owner of a private corporation, filing for bankruptcy
      could affect the corporation’s legal and tax status. This book doesn’t
      cover your situation.
    • Business reorganization. This book doesn’t cover Chapter 11 of the bankruptcy laws, which allows a business to continue operating while paying off all or a portion of its debts under court supervision.
    • Farm reorganization. A special set of bankruptcy statutes, called Chapter 12, lets family farmers continue farming while paying off their debts over time. Chapter 12 isn’t addressed in this book.


    An Overview of Chapter 7 Bankruptcy

    This book explains how to file for Chapter 7 bankruptcy. Chapter 7 bankruptcy is sometimes called “liquidation” bankruptcy. It cancels most types of debt. Most people who use Chapter 7 get to keep all their property, but if you have too much, the bankruptcy trustee will liquidate (sell) your nonexempt property for the benefit of your creditors. Some states are more generous than others when it comes to how much property you can keep. You can find a list of each state’s exemptions, as well as the federal exemptions, on the companion page of this book (; Ch. 3 delves into the subject of exemptions in much more detail.

    Here is a brief overview of the Chapter 7 bank­ruptcy process, from start to finish.

    What Bankruptcy Costs

    The whole Chapter 7 bankruptcy process takes about three to six months, costs $335 in filing fees (unless you get a waiver), and usually requires only one brief meeting, out of court, with the bankruptcy trustee—the official appointed by the bankruptcy judge to process your bankruptcy. If you use a lawyer, you can expect to pay an additional $1,500 or more in legal fees. Of course, you can save most of this money by representing yourself with the help of this book. (See Ch. 10 for information on finding lawyers.)

    Mandatory Credit Counseling

    Before you can file for bankruptcy, you must consult a nonprofit credit counseling agency. The purpose of this consultation is to see whether there is a feasible way to handle your debt load outside of bankruptcy, without adding to what you owe. You can complete this mandatory credit counseling course online or over the phone.

    To qualify for bankruptcy relief, you must show that you received credit counseling from an agency approved by the U.S. Trustee’s office within the 180-day period before you file.

    Once you complete the counseling, the agency will give you a certificate showing that you participated. It will also give you a copy of any repayment plan you worked out with the agency.

    There are a few exceptions to this counseling requirement. You don’t have to participate if you are in the military on active duty, you are incapacitated, or you have a disability that prevents you from participating. Also, if you try to get counseling with an approved agency at least seven days before filing for bankruptcy but can’t, you can ask the court for an additional 30 days to complete your course. You’ll have to explain why you weren’t able to fulfill the requirement. The court will grant the request if you can show that your honest effort to secure counseling was thwarted due to circumstances beyond your control.

    Rules Counseling Agencies Must Follow

    In addition to providing services without regard to your ability to pay, counseling agencies have to meet a number of other requirements. They must:

    • disclose to you their funding sources, their counselor qualifications, the possible impact of their proposed plan on your credit report, the cost of the program, if any, and how much of the costs you will have to pay
    • provide counseling that includes an analysis of your current financial condition, factors that caused the condition, and how you can develop a plan to respond to the problems without adding to your debt
    • use trained counselors who don’t receive any commissions or bonuses based on the outcome of the counseling services (that is, the counselors may not receive kickbacks, although kickbacks to the agency may be legal), and
    • maintain adequate financial resources to provide continuing support services over the life of any repayment plan. For example, if they propose a three-year payment plan, they must have adequate reserves to service your case for three years.


    The purpose of credit counseling is to give you an idea of whether you really need to file for bankruptcy or whether an informal repayment plan would get you back on your feet. Counseling is required even if it’s perfectly clear that a repayment plan isn’t feasible (that is, your debts are too high and your income is too low) or you have debts that you find unfair and don’t want to pay.

    The law requires only that you participate—not that you go along with whatever the agency proposes. Even if a repayment plan is feasible, you aren’t required to agree to it. However, if the agency does come up with a plan, you must file it along with the other required bankruptcy paperwork. (See Ch. 6 for more information on the credit counseling requirement, including how to get the certificate of completion that you’ll have to file with your other bankruptcy papers.)

    Filing Your Papers

    To begin a Chapter 7 bankruptcy case, you must complete a packet of forms and file them with the bankruptcy court in your area. Many filers are shocked to see the long list of documents required in a Chapter 7 case. But don’t be alarmed: The forms aren’t difficult to complete, they just take time. Just take things one step at a time, following the detailed instructions in Ch. 6, and you’ll do just fine.

    Once you file the papers described below, the court will send a notice of your bankruptcy filing to all of the creditors listed in your bankruptcy documents. You will get a copy as well. This notice, called a “341 notice” because it is required by section 341 of the bankruptcy code, sets a date for the meeting of creditors (see “The Meeting of Creditors (341 Hearing),” below), provides the trustee’s name, address, and telephone number, and gives creditors the deadlines for filing objections to your bankruptcy or to the discharge of particular debts.

    The Voluntary Petition

    You begin a Chapter 7 case by filing a Voluntary Petition, the official court form that requests a bankruptcy discharge of your debts. This form asks for some basic information, including your name, address, and the last four digits of your Social Security number; information about your creditors, debts, and property; and whether you have lived, maintained a residence or business, or had assets in the district where you are filing for most of the 180-day period before you file (this gives you the right to file in that district). You’ll find line-by-line instructions for completing the Voluntary Petition in Ch. 6.

    Additional Documents

    You will have to submit quite a few more documents, either when you file the petition or (with a few exceptions) within 14 days after you file. These additional documents include lists of your creditors, assets, debts, income, and financial transactions prior to filing; copies of your most recent federal tax return, bank statements, and wage stubs; a list of property you are claiming as exempt (that is, property that you are entitled to keep even though you are filing for bankruptcy); information on what you plan to do with property that serves as collateral for a loan (such as a car or home); proof that you have completed your prefiling credit counseling; and, later in your bankruptcy case, proof that you have completed budget counseling.

    Perhaps the most important form requires you to compute your average gross income during the six months prior to your bankruptcy filing date and compare that to the median income for your state. If your income is more than the median, another form takes you through a series of questions (called the “means test”) designed to determine whether you could file a Chapter 13 bankruptcy and pay some of your unsecured debts over time. The outcome of this test will largely determine whether you qualify for Chapter 7 bankruptcy. (See “Who Cannot File for Chapter 7,” below, and Ch. 6 for detailed information about these calculations.)

    Emergency Filing

    If you need to stop creditors quickly, you can do so without filing all of the bankruptcy forms we describe in Ch. 6 (although you’ll eventually have to complete the full set). In some situations, speed is essential. For example, if you face foreclosure and your house is going to be sold in a few days, or your car is about to be repossessed, filing an emergency petition will stop the repossession or foreclosure cold.

    To temporarily stop the collection efforts, you can simply file the Voluntary Petition form, your credit counseling certificate, a form providing your Social Security number, and a document known as the Creditors’ Matrix, which lists the name, address, and zip code of each of your creditors. The automatic stay, which stops collection efforts and lawsuits against you, will then go into effect. (Ch. 2 covers the automatic stay in detail.) You’ll have 14 days to file the rest of the forms. (Bankruptcy Rule 1007(c).)

    You should file on an emergency basis only if you absolutely must. Many emergency filers fail to meet the 14-day deadline and have their petitions dismissed as a result. Because you are rushing, you are more likely to make mistakes that have to be corrected later, which just adds work and potential errors to the process. But if filing an emergency petition is the only way to stop a potentially disastrous creditor action, go for it. Just remember the deadline for filing the rest of the forms.


    After you file, you might want to amend some or all of your forms to correct mistakes you discover or to reflect agreements you reach with the trustee. Amending these forms is fairly simple; we explain how to do it in Ch. 7.

    The Automatic Stay

    Often, people filing for bankruptcy have faced weeks, months, or even years of harassment by creditors demanding payment and threatening lawsuits and collection actions. Bankruptcy puts a stop to all this. Filing your bankruptcy petition instantly creates a federal court order called an “Order for Relief” and informally known as the “automatic stay” that requires your creditors to stop all collection efforts. So, at least temporarily, most creditors cannot call you, write dunning letters, legally take (garnish) your wages, empty your bank account, go after your car, house, or other property, or cut off your utility service or welfare benefits. As explained in Ch. 2, the automatic stay is not absolute. Some creditors are not affected by the automatic stay, and others can get the stay lifted to collect their debts, as long as they get the judge’s permission first.

    Renters beware. In many states, the automatic stay’s magic does not extend to certain eviction actions. Even if the automatic stay does kick in to temporarily halt your eviction when you file for bankruptcy, the bankruptcy court will almost always lift the stay and let the eviction proceed upon the landlord’s request. (See Ch. 2 for more information on the automatic stay and eviction proceedings.)

    Court Control Over Your Financial Affairs

    By filing for bankruptcy, you are technically placing the property you own and the debts you owe in the hands of the bankruptcy trustee (see “The Trustee,” below). While your case is open, you can’t sell or give away any of the property that you own when you file without the trustee’s consent. However, with a few exceptions, you can do what you wish with property you acquire and income you earn after you file for bankruptcy. You are also allowed to borrow money after you file.

    The Trustee

    The bankruptcy court exercises control over your property and debts by appointing an official called a “trustee” to manage your case. Your trustee’s name and contact information will be in the official notice of filing you receive in the mail several days after you file your petition. The trustee (or the trustee’s staff) will examine your papers to make sure they are complete and accurate, and to look for property to sell for the benefit of your creditors. The trustee’s primary duty is to see that your creditors are paid as much as possible. The trustee is mostly interested in what you own and what property you claim as exempt, but will also look at your financial transactions during the previous years. In some cases these can be undone to free up assets that can be distributed to your creditors. While it is tempting to believe the trustee is there to help you, that is not the case. The more assets the trustee recovers for creditors, the more the trustee is paid.

    Some courts appoint full-time trustees called “standing” trustees to handle all cases filed in that courthouse. Other courts appoint trustees on a rotating basis from a panel of bankruptcy lawyers called “panel” trustees. Either way, the trustees have the same responsibilities.

    The U.S. Trustee

    The U.S. Trustee Program is a division of the U.S. Department of Justice. Each U.S. Trustee oversees several bankruptcy courts. Individual cases within those courts are assigned to assistant U.S. Trustees, who also employ attorneys, auditors, and investigators. U.S. Trustees work closely with their Department of Justice colleagues from the FBI and other federal agencies to ferret out fraud and abuse in the bankruptcy system. The U.S. Trustees (and the assistant U.S. Trustees) also supervise the work of the panel or standing trustees, who are appointed by the courts.

    You will most likely encounter the U.S. Trustee in one of the following cases:

    • Your bankruptcy papers suggest that you may be engaging in fraudulent behavior.
    • Your case is selected for a random audit.
    • Your bankruptcy schedules show that you don’t pass the means test (explained later in this chapter).
    • You use a bankruptcy petition preparer (BPP) to help you with your paperwork (see Ch. 10 for more on BPPs), and the trustee believes that the BPP has done something illegal—typically, that the BPP has not just helped you complete your papers, but has given you legal advice as well, something that only lawyers are allowed to do. In this situation, your bankruptcy might be affected (particularly if the advice given was incorrect), and the U.S. Trustee may want you to act as a witness against the BPP.


    How Trustees Get Paid

    Trustees receive a flat fee of $60 per Chapter 7 case. In addition, trustees are entitled to a percentage of the funds they disburse to the debtors’ creditors: 25% of the first $5,000 disbursed, 10% of the next $45,000, and so on. Most Chapter 7 cases involve no disbursements (because typically there are no nonexempt assets), so trustees usually have to settle for the $60 fee. But these fee rules give trustees a financial incentive to look closely at bankruptcy filings, especially if debtors appear to have some valuable property. Trustees can earn a “commission” if they can actually find property, sell it, and distribute the proceeds to creditors.


    The Meeting of Creditors (341 Hearing)

    As explained above, you will receive notice of the date of your meeting of creditors (also called the 341 hearing) shortly after you file your bankruptcy papers. This meeting is typically held somewhere in the courthouse or federal building (but almost never in a courtroom). The trustee runs the meeting and, after swearing you in, might ask you questions about your bankruptcy and the documents you filed. For instance, the trustee might ask how you arrived at the value you assigned to an item of property listed in your papers, whether you have given anything away in the last year, and whether the information you put in your papers is 100% accurate. All together, this questioning usually takes about five minutes. Creditors rarely attend this meeting—but if they do, they will also have a chance to question you under oath, usually about where property that serves as collateral to a loan is located, information you gave them to obtain a loan, or the nature and location of your assets in general. In most bankruptcy cases, this will be the only personal appearance you have to make. We discuss the creditors’ meeting in more detail, and explain other situations when you might have to appear in court, in Ch. 7.

    When a Disgruntled Ex-Spouse Casts Suspicion on Your Petition

    Most of the time, a trustee won’t question the accuracy of your personal property schedules unless there is a reason to do so. So what causes a trustee to become suspicious? One source of suspicion that’s hard to ignore is a disgruntled ex-spouse who shows up at the meeting of creditors claiming that you didn’t list an expensive watch or the artwork you bought on your honeymoon. These types of allegations, if credible, might prompt the trustee to take a closer look at your petition and, if warranted, request an inventory of your home or storage facility. Of course, the easiest way to prevent this is to be as transparent as possible and to keep in mind that sometimes your past does indeed come back to haunt you.


    What Happens to Your Property

    In your bankruptcy papers, you’ll be asked which items of your property you claim as exempt. Each state allows debtors to keep certain types of property or a certain amount of equity in that property. The exemptions available to you depend on where you lived prior to filing for bankruptcy. (For more information, see Ch. 3.)

    If, after the creditors’ meeting, the trustee determines that you have some nonexempt property, you might be required to either surrender that property or provide the trustee with its equivalent value in cash. The trustee is highly unlikely to inventory your home (though it can happen) or seize your property, but will order you to turn over property listed in your schedules or identified during your creditors’ meeting or in other proceedings. If you don’t turn over the property, the bankruptcy judge can order you to do it (and hold you in contempt if you don’t). Plus, the court can dismiss your bankruptcy petition if you fail to cooperate with the trustee.

    If your nonexempt property isn’t worth very much or would be hard to sell, the trustee might “abandon” it—which means that you get to keep it, even though it’s nonexempt. As it turns out, unless the debtor has a significant amount of home equity, or owns luxury goods, most of the property will be either exempt or essentially worthless for purposes of raising money for creditors.

    Secured Debts

    If you’ve pledged property as collateral for a loan, the loan is called a secured debt. The most common examples of collateral are houses and motor vehicles. If you are behind on your payments, a creditor can ask to have the automatic stay lifted so it can repossess the property or foreclose on the mortgage. However, if you are current on your payments, you can keep the property and continue making payments as before—unless you have built up enough nonexempt equity in the property to make it worthwhile for the trustee to sell it for the benefit of your unsecured creditors. (See Ch. 5 for more information on secured debts.)

    If a creditor has recorded a lien against your property without your consent (for example, because the creditor obtained a money judgment against you in court), that debt is also secured. However, in some cases and with certain types of property, you might be able to wipe out the debt and keep the property free of the lien. This is called “lien avoidance,” and it is covered in Ch. 5.

    Contracts and Leases

    If you signed a contract or lease that’s still in effect, the trustee might take your place as a party to the contract—known as “assuming” the contract—and enforce it for the benefit of your unsecured creditors. Alternatively, the trustee can decide not to step in as a party to the contract—called “rejecting” the contract—in which case you get to decide whether you want the contract to continue in force or not.

    For example, suppose you have a five-year lease on some commercial property when you file for bankruptcy. If you’ve got a good lease (perhaps at below-market rate for property in an up-and-coming part of town), the trustee could decide to assign the lease to a third party at a profit and use the proceeds to pay your unsecured creditors. In this situation, the trustee will assume the lease and assign it to the highest bidder. However, if the trustee doesn’t think selling the lease is worth the trouble, the trustee will take no action, which is the same thing as rejecting the lease.

    You can assume leases on personal property, such as a car or business equipment, rather than have the trustee assume them. However, you will be allowed to do this only if you are able to cure any defaults on the lease, as required by the creditor. (Ch. 6 provides instructions for completing Schedule G, a required bankruptcy form in which you list all current contracts and leases, and the Statement of Intention, another required form in which you tell your creditors and the trustee whether you would like to assume any leases.)

    Personal Financial Management Counseling

    All debtors must attend a course on managing finances in order to receive a bankruptcy discharge, sometimes referred to as budget counseling, debtor education, or predischarge counseling. You must take this course from an agency approved by the U.S. Trustee Program. You will be charged fees on a sliding scale, but you can’t be denied services because of your inability to pay. Once you complete your counseling, you must file a certification form with the court. For a list of approved agencies, go to the U.S. Trustee’s website,, and click “Credit Counseling & Debtor Education.”

    The Bankruptcy Discharge

    About 60 days after the 341 hearing—the one hearing all filers must attend—you will receive an Order of Discharge from the court. This notice doesn’t list which of your particular debts are discharged, but it provides some general information about what kinds of debts are and are not affected by the discharge order. In most cases, all debts are discharged except:

    • debts that automatically survive bankruptcy (child support, most tax debts, and student loans are examples), and
    • debts that the court has declared nondischarge­able as a result of an action brought by a creditor, as might be the case for debts you incurred through fraudulent or willful and malicious acts.

    Ch. 9 explains which debts are—and are not— discharged at the end of your bankruptcy case. Also, “Who Cannot File for Chapter 7,” below, explains the circumstances in which your entire discharge—not just the discharge of a specific debt—might be denied.

    What If You Change Your Mind About Chapter 7 Bankruptcy After Filing?

    If you don’t want to go through with your Chapter 7 bankruptcy after you file, you can’t dismiss it on your own. Instead, you must ask the court to dismiss your case. A court will generally agree, as long as the dismissal won’t harm your creditors’ interests—but in many cases, a debtor wants a dismissal to prevent a property loss. For example, if you have substantial nonexempt equity in your house, the court will probably deny your dismissal request so the trustee can sell the house to make some money for your unsecured creditors. (See Ch. 4 for more on what happens to your home in bankruptcy.)

    As an alternative to having your case dismissed, you may exercise your one-time “right to convert” the case to a Chapter 13 bankruptcy, as long as you really intend to propose and follow a repayment plan. This will keep your property out of the trustee’s hands, because in Chapter 13 you don’t have to surrender property. You do, however, have to pay your unsecured creditors at least the value of your nonexempt property, as explained in “Pay Over Time With Chapter 13 Bankruptcy,” below. If you don’t have enough income to pay into a Chapter 13 repayment plan, your case will get dismissed.


    After Bankruptcy

    Once you receive your bankruptcy discharge, you are free to resume your economic life without reporting your activities to the bankruptcy court unless you receive (or become eligible to receive) an inheritance, insurance or lottery proceeds, or proceeds from a divorce settle­ment within 180 days after your filing date. In that case, you have a duty to report those assets to the trustee. If you don’t, and they are discovered, the trustee (and the court, if necessary) can order you to turn over the assets and your discharge could be revoked.

    After bankruptcy, you cannot be discriminated against by public or private employers solely because of the bankruptcy, although this ban on discrimination has exceptions (discussed in Ch. 8). You can start rebuilding your credit almost immediately, but it might take several years (or more) to get decent interest rates on a credit card, mortgage, or car note. You can’t get a debt discharge in a subsequent Chapter 7 bankruptcy case until eight years have passed since your last filing date, or in Chapter 13, unless you file at least four years after you filed the earlier Chapter 7 case. There are situations in which you might want to file bankruptcy even though you wouldn’t be entitled to a discharge. For instance, filing a Chapter 13 can help stop a wage garnishment or spread out payments on support arrearages.

    Who Cannot File for Chapter 7

    Filing for Chapter 7 bankruptcy is one way to solve debt problems, but it isn’t available to everyone. Here are some situations in which you might not be able to use Chapter 7 to discharge debt.

    You Can Afford a Chapter 13 Repayment Plan

    Under the bankruptcy rules, filers with higher incomes must pay back some of their debts over time under Chapter 13 rather than liquidating their debts outright in Chapter 7. If the U.S. Trustee decides that your income, debts, and expenses indicate that you can afford a Chapter 13 plan under the rules, it will file a motion to have your case dismissed. The court is likely to grant that motion and throw out your case unless you convert to a Chapter 13 bankruptcy.

    To figure out whether you can discharge debt in Chapter 7, you must first:

    • determine your “current monthly income” (your average income in the six months before you file for bankruptcy)
    • multiply your current monthly income by 12, and
    • compare that figure to the yearly median family income in your state for the same size household.

    If your current monthly income (multiplied by twelve) is no more than the state’s yearly median income, your Chapter 7 bankruptcy won’t be presumed to be “an abuse” of the bankruptcy process. However, if your actual income shown in Schedule I of your bankruptcy papers is significantly higher than your expenses you might still be forced into Chapter 13 (explained in Ch. 6).

    If your income exceeds the state median income, you will have to do some calculations to determine whether you can afford to pay off at least some of your unsecured debts in a Chapter 13 plan. This qualification process is known as the means test. (You can find step-by-step means test instructions in Ch. 6.)

    You Have Marijuana Assets

    Over the past several years, some states have legalized the personal or medical use of marijuana. Under these new laws, an individual or business might possess either a relatively small amount of marijuana for personal use, or could have a significant amount of inventory in a dispensary. Either way, filers with marijuana assets have turned to bankruptcy with greater frequency, believing that because the industry is legal in their home state that filing for bankruptcy is a viable option for resolving debt problems. It’s not the case. Marijuana remains illegal under federal law, and all cases involving marijuana assets must be dismissed. Of course, one must assume that the filer could be subject to criminal penalties. In fact, the U.S. Trustee was involved with 24 marijuana enforcement actions in 2018, seven of which were in Chapter 7 cases. If you’re considering filing for bankruptcy and you’re concerned that this problem might arise in your matter, you’ll want to speak with an attorney familiar with the issue.

    Certain Disabled Veterans Can Skip the Math

    If you are a disabled veteran, and the debts you wish to discharge were incurred primarily while you were on active duty or engaged in homeland defense activities, the court is legally required to treat you as if your income is less than the state median and allow you to file for Chapter 7 regardless of your income or expenses.

    The law doesn’t clearly indicate what will happen if only some of your debts were incurred while you were on active duty. Some courts require that more than 50% of your debts be incurred while on active duty to qualify for this exception. However, other courts may have stricter requirements. If you are unsure about whether you qualify, talk to a bankruptcy attorney in your area to learn the requirements in your jurisdiction.


    Determine Your Current Monthly and Yearly Income

    Legally, your income for the means test is your average income over the six months preceding the month in which you filed for bankruptcy. You must include almost all types of income (with a few exceptions such as benefits received under the Social Security Act), taxable or not—this means, for example, that if you are including wages in your income, for the first portion of the means test, you must use your gross earnings, not the net income you actually take home after taxes are withheld and other deductions are made. For filers who lost jobs or other income during the six-month period before filing for bankruptcy, this income figure could be significantly more than what they are actually earning each month by the time they file for bankruptcy.

    Example: John and Emma are married and have two young children. They fell quickly into debt after John lost his job because of a work-related injury on April 1, 2017. Three months later, on July 1, 2017, John and Emma decide to file for bankruptcy.

    To compute their qualifying income, Emma adds up the family’s income for the period from January 1, 2017 through June 30, 2017 (the six-month period before their filing date). This includes John’s gross salary for the first three months (he made $8,000 a month as a software engineer), plus $1,800 in workers’ compensation benefits for each of the last three months. Emma made $1,000 during each of the first three months and had no income for the last three months. The total family income for the six-month period is $32,400. Emma will double this amount to arrive at a yearly family income of $64,800.

    Use the Current Monthly and Yearly Household Income Worksheet (found on the companion page at, to calculate your household income by:

    • adding up all of the income you received during the six-month period before the month in which you filed for bankruptcy, and
    • dividing it to come up with your current monthly household income for the means test, and
    • multiplying your current monthly income by 12 to come up with your yearly income.

    You should include all of the following types of income on the form:

    • wages, salary, tips, bonuses, overtime, and commissions
    • gross income from operating a business, profession, or farm
    • interest, dividends, and royalties
    • rents and other income from real property
    • pension and retirement income
    • regular contributions someone else makes to your or your dependents’ household expenses, including child or spousal support
    • regular contributions of your spouse, if he or she isn’t filing for bankruptcy with you
    • unemployment compensation (in some states; in others you may not have to include state unemployment insurance benefits)
    • workers’ compensation insurance
    • state disability insurance
    • annuity payments, and
    • lump-sum, windfall payments (such as lottery winnings).

    Determine Your Household Size

    The size of your household is also very important. The more members you have, the less likely it is that your income will exceed the state median for households of the same size, and the less likely you are to have to take the means test. For example, assume that your yearly household income is $60,000, the median income for a household of three in your state is $58,000, and the median income for a household of four is $62,000. Being able to count that additional person means you will pass the means test.

    Unfortunately, neither Congress nor the courts have given clear guidance on how to calculate household size. Many courts adopt the census test for a household, which includes all of the people, related and unrelated, who occupy a house, apartment, group of rooms, or single room that is intended for occupancy as separate living quarters. Under this test, you can count your children or stepchildren.

    However, some courts allow debtors to count only qualifying dependents. Other courts use the economic unit approach to household size, which includes individuals who financially depend on or support the debtor or whose income and expenses are closely intermingled with and connected to the debtor’s.

    Roommates are not part of the same household if they have separate rooms within a house and don’t act as a single economic unit by mingling their incomes and jointly paying expenses.

    One issue is whether children can be counted as part of a household if they are only living with the parent part time under a custody and visitation agreement. In general, the answer depends on the rules in your jurisdiction. If this describes your situation, and being able to count your children as part of your household would mean you pass the means test, it might make sense to talk to a local bankruptcy attorney and find out how your local court handles this issue. (See Ch. 10 for information on finding a bankruptcy lawyer.)

    Compare Your Yearly Income to Your State’s Family Median Income

    Once you’ve got your family yearly income, compare it to see whether your income is more or less than the median. You can find the family median income figures as of the writing of this edition in the Median Family Income Chart included on the companion page ( Be aware that means testing figures change several times per year, and you’ll want to use the most recent chart You can find up-to-date figures at the website of the U.S. Trustee at (select “Means Testing Information”).

    Income You Don’t Have to Include

    Your income includes income from all sources, except:

    • income tax refunds
    • payments you receive under the Social Security Act (including Social Security retirement benefits, Social Security Disability Insurance, Supplemental Security Income, Temporary Assistance for Needy Families, and possibly state unemployment insurance)
    • payments to you as a victim of war crimes or crimes against humanity, and
    • payments to you as a victim of international or domestic terrorism.


    What to Do Next

    If, like most bankruptcy filers, your yearly income is equal to or less than your state’s median, then you will likely be allowed to file for Chapter 7 bankruptcy. As you will discover, however, your actual monthly income and actual expenses, as calculated on Schedules I and J could prevent you from receiving a discharge in Chapter 7, even if you pass the means test. Because of how the means test works, your actual monthly income could be quite different than your current monthly means test income, primarily because the means test uses your average income over the six months before you file, which might not be the same as what you actually earn each month. For instance, suppose you were unemployed for six months but accepted a well-paying position one month before filing for bankruptcy. The trustee appointed to oversee your case would review both the means test result and your actual monthly income and expenses outlined on Schedules I and J. So even if you passed the means test, if your budget showed that you made significantly more than what was needed to pay your monthly expenses going forward, you’d likely have to convert to Chapter 13 to prevent a dismissal.

    If your yearly income exceeds the state median income, you aren’t excluded from Chapter 7 automatically. The second part of the means test allows you to subtract certain expenses from your income. After doing so, if you don’t have enough left over to make a meaningful payment to creditors, you’ll still pass. If you can’t pass the second portion, you would have to persuade the court that it’s appropriate for you to file for Chapter 7, under the circumstances—see “Special Problems” in Ch. 7.) You can find the means test forms and step-by-step instructions for completing them in Ch. 6.

    If you can’t pass the means test, you might consider filing for Chapter 13 bankruptcy, with the help of Nolo’s Chapter 13 Bankruptcy, by Cara O’Neill. You should also look at options outside of the bankruptcy system, in “Alternatives to Chapter 7 Bankruptcy,” below.

    You Previously Received a Bankruptcy Discharge

    You cannot obtain a Chapter 7 bankruptcy discharge if you obtained a discharge of your debts under Chapter 7 in a case filed within the past eight years, or you received a discharge under Chapter 13 in a case filed within the previous six years.

    Note that these eight- and six-year periods run from the date you filed for the earlier bankruptcy, not the date you received your discharge.

    Example: Madison files a Chapter 7 bankruptcy case on January 31, 2019. She receives a discharge on April 20, 2019. Madison files another Chapter 7 bankruptcy on February 1, 2027. The second bankruptcy is allowed because eight years have passed since the date the earlier bankruptcy was filed (even though fewer than eight years have passed since Madison received a discharge in the earlier case).

    A Previous Bankruptcy Was Dismissed Within the Previous 180 Days

    You cannot receive a Chapter 7 bankruptcy discharge if your previous Chapter 7 or Chapter 13 case was dismissed within the past 180 days because you:

    • violated a court order, or
    • requested the dismissal after a creditor asked for relief from the automatic stay. (11 U.S.C. § 109(g).)

    You Haven’t Met the Credit Counseling Requirements

    To file for Chapter 7 bankruptcy, you have to satisfy all the requirements for credit counseling. This means that you must obtain the counseling within 180 days before you file, and file a certificate of completion no later than 14 days after you file, unless you fit within one of the exceptions to the counseling requirement or you didn’t obtain counseling for some other reason that is acceptable to the bankruptcy court. (See Ch. 6 for more on these requirements.)

    Converting to Chapter 7 After Filing for Chapter 13

    Can you file under Chapter 13 and then convert to Chapter 7 later, without taking the means test? It will depend on where you live and the circumstances of your case. But, regardless of the semantics used in individual cases, virtually all courts have some way of ensuring that a debtor with the ability to repay debt doesn’t use the conversion process to avoid paying creditors. For instance, in In re Trotta, 597 B.R. 269 (Bankr. E.D. Penn. 2019), the court takes into consideration the totality of the debtor’s financial circumstances, including the means test and the potential of a bad faith motive.

    The court in In re Fox, 370 B.R. 639 (Bankr. D. N.J. 2007) applies a more lax conversion standard. This court found that the debtor did not have to file the means test form when converting from a Chapter 13 to a Chapter 7. However, the court emphasized that the debtor must have filed the Chapter 13 in good faith and not just to avoid taking the means test. This means the debtor must have proposed a feasible (or close to feasible) Chapter 13 plan. The test doesn’t take into account the debtor’s current ability to pay, and represents a minority approach.

    By contrast, in a Texas bankruptcy court, a debtor must pass the means test when converting from Chapter 13 to Chapter 7 to prevent a debtor living a lavish lifestyle from receiving a Chapter 7 debt discharge. (In re Croft, 539 B.R. 122 (Bankr. W.D. Tex. 2015).)

    The court in In re Layton, 480 B.R. 392 (Bankr. M.D. Fla. 2012) falls somewhere in the middle, finding that the means test isn’t necessary if the conversion occurs after a job loss.


    You Defrauded Your Creditors

    Bankruptcy is intended to help an honest debtor who got in too deep financially and needs a fresh start. A bankruptcy court will not help someone who has played fast and loose with creditors or the court. This type of behavior can lead to a denial of your bankruptcy discharge and even to criminal charges.

    The bankruptcy court isn’t the place to try to skirt the law. There are only so many things a debtor can do to try to come out ahead, and filers should assume that anything they could possibly dream up has been unsuccessfully tried before. Certain activities are red flags to the courts and trustees. If you have engaged in any of them within the past several years, do not file for bankruptcy until you consult with a bankruptcy lawyer.

    Examples of such no-nos are:

    • selling assets to friends or relatives for less than what the property is worth
    • incurring debts for luxury items when broke and without the intent to pay, and
    • any attempt at concealing property or money from creditors.

    Your Filing Constitutes “Abuse”

    The court can dismiss your case if it finds that your filing is abusive—that is, that your actions demonstrate that you aren’t entitled to the remedy offered by Chapter 7. As explained above, if you fail the means test, the court can presume that your bankruptcy filing is abusive and prevent you from using Chapter 7. However, even if you pass the means test, the court might find abuse. For example, if your actual income (as calculated in Schedule I of your bankruptcy paperwork) significantly exceeds your actual expenses (as calculated in Schedule J of your papers), the court might find that you should not be allowed to use Chapter 7, even if you pass the means test.

    Here are some other reasons the court might deny you the benefit of Chapter 7 when you otherwise qualify:

    • The court can refuse to grant a Chapter 7 discharge if the debtor fails to keep records that can be used to verify the debtor’s financial condition. (In re Tanglis, 344 B.R. 563 (Bankr. N.D. Ill. 2006).)
    • If the debtor fails to explain what happened to money withdrawn from a business or fails to disclose property, the court can refuse to grant a Chapter 7 discharge. (In re Beatty, 583 B.R. 128 (Bankr. N.D. Ohio 2018).)
    • Voluntary unemployment can be considered abusive, because the debtor could pay back some or all of the debts if employed. (In re Richie, 353 B.R. 569 (Bankr. E.D. Wash. 2006).)
    • A debtor who couldn’t account for how cash advances were spent during the previous year could be denied a Chapter 7 discharge on grounds of abuse. (In re Yanni, 354 B.R. 708 (Bankr. E.D. Penn. 2006).)

    These types of cases are pretty unusual because they’re somewhat difficult to prove. For instance, in an omitted asset case, the creditor must first prove that the debtor failed to include an asset. Even if the creditor can do so, the court will accept a reasonably plausible explanation for the omission from the debtor. A creditor would need to be quite certain of the facts before willingly incurring the cost to try such a case.

    You Are Attempting to Defraud the Bankruptcy Court

    Misleading the court is a terrible idea. If you lie, cheat, or attempt to hide assets, your current debt crisis may no longer be your biggest legal problem. You must sign your bankruptcy papers under “penalty of perjury,” swearing that everything in them is true. You also have to verify your papers, under oath, at your creditors’ meeting. If you get caught deliberately failing to disclose property, omitting material information you are asked to provide about your financial affairs during previous years, or using a false Social Security number (to hide your identity as a prior filer), you will not get any bankruptcy relief. You may even be prosecuted for perjury or fraud on the court.

    The U.S. Trustee Program Actively Roots Out Fraud

    The U.S. Trustee Program, a branch of the U.S. Department of Justice, is charged with rooting out bankruptcy-related fraud. Copies of all bankruptcy petitions filed in your district are up for review by the U.S. Trustee for that district. The U.S. Trustee randomly selects some cases for audit, and audits others that have red flags indicating possible fraud. In 2017, the program made 2,171 bankruptcy-related criminal referrals. The potential crimes identified included tax fraud, providing false information, concealing assets, engaging in bankruptcy fraud schemes, identity theft, and using false Social Security numbers. You don’t need to worry about these statistics as long as you are scrupulously honest in your paperwork and disclosures. In fact, they represent less than three percent of the 767,721 bankruptcy cases filed in 2017.


    Does Chapter 7 Bankruptcy Make Economic Sense?

    If you are leaning toward filing for Chapter 7 bankruptcy, take a moment to consider whether it makes economic sense. If filing for Chapter 7 won’t help you out of your current debt problems, will force you to give up property you want to keep, or is unnecessary because of your financial situation, then Chapter 7 might not be the best option.

    If you are married, consider the debts and property of both spouses as you read this section. Married couples usually benefit from filing jointly, but not always. For example, if one spouse brings a lot of debt to the marriage, while the other spouse has clean credit, it might make more sense for the debt-ridden spouse to file alone. Filing alone might also be a good idea if one spouse is barred from filing due to a previous bankruptcy, or filing together would put valuable property at risk (for example, property owned only by the nonfiling spouse or property the couple owns as tenants by the entirety). You’ll find more information on the benefits of filing jointly versus filing alone in Ch. 6.

    Are You Judgment Proof?

    Most unsecured creditors are required to obtain a court judgment before they can start collection procedures, such as a wage garnishment or seizure and sale of personal property. Holders of tax, child support, and student loan debts are exceptions to this general rule. If your debts are mainly of the type that requires a judgment, the next question is whether you have any income or property that is subject to seizure by your creditors if they obtain a judgment. For instance, if all of your income comes from Social Security (which can’t be taken by creditors as long as it isn’t commingled with other funds), and all of your property is exempt (see Ch. 3), there is nothing a creditor can do with a judgment. That makes you judgment proof.

    While you might still want to file for bankruptcy to get a fresh start, nothing bad will happen to you if you don’t file, no matter how much you owe. (For more on what it means to be judgment proof, see “Alternatives to Chapter 7 Bankruptcy,” below.)

    Sample Letter Telling Collection Agency to Stop Contacting You

    Sasnak Collection Service
    49 Pirate Place
    Topeka, Kansas 69000

    November 11, 20xx

    Attn: Marc Mist

    Re: Lee Anne Ito
    Account No. 88-90-92

    Dear Mr. Mist:

    For the past three months, I have received several phone calls and letters from you concerning an overdue Rich’s Department Store account.

    This is my formal notice to you under 15 U.S.C. § 1692c(c) to cease all further communications with me at my home or place of employment except for the reasons specifically set forth in the federal law.

    This letter is not meant in any way to be an acknowledgment that I owe this money.

    Very truly yours,

    Lee Anne Ito

    It’s not uncommon for a judgment-proof debtor to want to file for bankruptcy to stop harassment by creditors. In most cases, you can stop creditors from making telephone calls to your home or work by simply telling them to stop. Changing your phone number may also help, as well as screening calls. If collection agencies are doing the harassment, you can also send them a letter like the one shown below, which almost always does the trick.

    If a collector continues to harass you after you have given written notice, you can sue the collector under the Fair Debt Collection Practices Act (15 U.S.C. §§ 1692–1692o) for any damage you suffer (such as medical conditions caused by the harassment) as well as statutory damages. You can also collect attorneys’ fees, which makes it easier to find an attorney who will represent you without requiring you to pay a retainer up front. Your state may have similar legal protections against harassment by a collection agency or an original creditor—and additional remedies for violations of the law. (For more information on illegal debt collection practices, see Solve Your Money Troubles, by Amy Loftsgordon and Cara O’Neill (Nolo).)

    Using Bankruptcy to Get New Credit

    Even if you are judgment proof, you might want to file for bankruptcy to clear your credit. It’s very likely that you will be able to rebuild your credit sooner by filing for bankruptcy than by ignoring your debts. In fact, you’ll likely receive offers for credit cards and car loans shortly after receiving your discharge. (For more on rebuilding your credit, see Ch. 8.)


    Will Bankruptcy Discharge Enough of Your Debts?

    Certain categories of debts may survive Chapter 7 bankruptcy, depending on the circumstances. It might not make much sense to file for Chapter 7 bankruptcy if your primary goal is to get rid of these nondischargeable debts.

    There are three categories of nondischargeable debts:

    • debts that always survive bankruptcy
    • debts that survive bankruptcy unless you convince the court that a particular exception applies, and
    • debts that survive bankruptcy only if a creditor mounts a successful challenge to them in bankruptcy court.

    If most of your debts are the kind that automatic­ally survive bankruptcy or that survive unless a particular exception applies, hold off on filing your Chapter 7 bankruptcy until you have at least read Ch. 9 and learned what is likely to happen to these debts in your case. In particular, you should be concerned about:

    • back child support and alimony
    • debts other than support that arise from a marital settlement agreement or divorce decree
    • student loans
    • government fines, penalties, or court-ordered restitution
    • tax arrearages (including debts incurred to pay a tax—for example, if you used a credit card to pay back taxes), and
    • court judgments for injuries or death resulting from your drunk driving convictions.

    The following types of debts can survive bank­ruptcy, but only if the creditor mounts a successful challenge to them in the bankruptcy court:

    • debt incurred on the basis of fraud, such as lying on a credit application or writing a bad check
    • debt for luxury items that you recently bought on credit with no intention of paying for them
    • debt from willful and malicious injury to another person or another’s property, including assault, battery, false imprisonment, libel, and slander, and
    • debt from larceny (theft), breach of trust, or embezzlement.

    We hope you enjoyed this free sample of How to File for Chapter 7 Bankruptcy. To read the rest of the chapter, please purchase the book.

  • Downloads & Updates
  • Purchase this book and access its' dedicated webpage to:

    • Download forms, worksheets, and checklists. Download and print these important documents to complete your DIY legal endeavor. After purchase, you can find a download URL in Appendix A.
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    • Read blogs. Get trending info from the authors' blogs.
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9 Reviews
5 Star
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By Roni T.

I found it to be very through and informative

Posted on 8/23/2021

Informative book with step by step instructions.

By William T.

Book is outdated for 2017, but still very good to help you understand schedules and most questions as they go through each step with you explaining what the questios is about. It saved me a lot of headache and time. I filed pro se on 01/11/2017

Posted on 10/14/2019

Out of date - uses the old forms.

By Anonymous

Great book, explains everything, but doesn't use the latest forms. Despite that, it's useful. Recommended.

Posted on 10/14/2019

Wouldn't recommend doing it without this book...also check the updates!

By Anonymous

I've been extremely satisfied with this specific product from NOLO. I was really impressed to see that they released several different updates to reflect changes to the forms since they have changed since the original release of the book. I think it was very nice of them to include the updates.

Posted on 10/14/2019

Chapter 7 book

By Anonymous

I'm very happy with this product it has everything I need. I would definitely buy this again.

Posted on 10/14/2019


By Anonymous

Very helpful, thorough and easy to understand.

Posted on 10/14/2019


By Bill

Since the title of the book is How to File I assumed it would be detailed regarding filling out the required forms. It is not. Example: I have no work related income, only a pension and social security. So, where do I list the federal taxes paid on these benefits? The book give absolutely no answer to this simple question. The one area where these taxes might possibly be listed is not even covered.

Posted on 10/14/2019


By William B.

I find the item how to file for chapter7 bankruptcy fully informing. I haven't used it yet. I'll probably do so soon.

Posted on 10/14/2019

All of the Answers!

By George H.

Answered all of my questions in a straight forward way

Posted on 10/14/2019

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