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There are many events in life, such as the loss of a job or a medical emergency, that can leave us in difficult financial circumstances. Chapter 7 bankruptcy can help you hit the refresh button. It doesn’t happen overnight, however, and it’s important to be prepared, so follow along with us as we go over what Chapter 7 is and how to file Chapter 7 bankruptcy.  

What Is Chapter 7 Bankruptcy?

Often known as straight or liquidation bankruptcy, Chapter 7 bankruptcy removes your unsecured debt (credit card debt, medical and utility bills, personal loans, etc.), typically after a few months. None of the debt is repaid. 

The process usually looks like this: 

1. You file for Chapter 7 bankruptcy. This involves seeking credit counseling and filing both forms and a petition in court. These forms will list your income and expenses along with property exemptions (assets you are allowed to keep in bankruptcy under state and federal laws).

2. The court places an automatic, temporary hold on your current debts. Doing this prevents creditors (the people or companies that you owe money) from collecting payments from you, evicting you, turning off your utilities, and other actions resulting from your debts.

3. What happens after filing for Chapter 7 bankruptcy is that the court assigns a trustee for your bankruptcy case. This person is responsible for selling your nonexempt assets (property/goods you cannot keep).

4. Your trustee holds a meeting between you and your creditors to answer questions, correct mistakes, and sell your property. They distribute the money acquired through these sales to the creditors. In order for creditors to get their money back, they must file a claim with the court. 

Costs Involved in Chapter 7 Bankruptcy

As ironic as it might be, filing for bankruptcy involves spending money. Bankruptcy costs entail: 

How to File Chapter 7 Bankruptcy with No Money

We understand that you may not have the funds to file for bankruptcy. So how do you file Chapter 7 bankruptcy with no money? There are options available such as:

  • Free consultations: Talk to your attorney to see if there are free consultation options that are available for clients like yourself.
  • Pro bono: You can seek pro bono attorneys who offer their services free of charge or at a reduced price.
  • Borrow from family/friends: Reach out to those you trust to get support. 

How Long Does Chapter 7 Stay on Your Credit Report

After you have sold your assets to creditors and the court releases you from your debts, the journey isn’t quite over yet. Even though you don’t have money to repay, bankruptcy does get recorded on your credit report. 

How long does Chapter 7 stay on your credit report? This bankruptcy remains on your report for 10 years from the date you filed your case. It negatively affects your credit, but this impact will gradually diminish as the years go by.

How Often Can You File Chapter 7?

Though we don’t want to encourage you to continue pursuing the bankruptcy route, if unexpected events come up, you can file for Chapter 7 again. How often you can file Chapter 7 depends on the time period and the conclusion of your previous Chapter 7 bankruptcy. 

At the end of the day, you must wait 8 years from the time you filed your previous Chapter 7 to file again. You must have been successfully released from your previous bankruptcy.

Before deciding to file for bankruptcy, lay out all your options on the table and seek advice from qualified financial counselors. Since circumstances vary from person to person, it’s important to find a solution that is right for you. CreditAnswers does not give legal advice. Please consult an attorney if you are contemplating filing for bankruptcy.

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CreditAnswers understands that being in tight financial circumstances is overwhelming. We can help guide you out of these challenging times. Learn more about our debt relief services by requesting a free debt assessment. Take control of your money today!


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