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What to Do Before Filing Chapter 7 Bankruptcy
What to Do Before Filing Chapter 7 Knowing what to do before filing Chapter 7 bankruptcy can make the difference
November 21, 2025
What to Do Before Filing Chapter 7 Bankruptcy
What to Do Before Filing Chapter 7
Knowing what to do before filing Chapter 7 bankruptcy can make the difference between a smooth process and costly delays. Chapter 7 bankruptcy offers debt relief for individuals facing overwhelming financial hardship, but proper preparation is crucial for success. This guide outlines the critical steps you must complete before submitting your petition to ensure the best possible outcome.
Mandatory Requirements: Complete Credit Counseling First
Before filing Chapter 7 bankruptcy, you must complete credit counseling from an approved agency within 180 days of your filing date. This requirement cannot be waived except in extreme circumstances. The counseling session typically lasts 60-90 minutes and costs between $10-$50.
During credit counseling, you’ll review your financial situation, explore alternatives to bankruptcy, and receive a certificate of completion. Keep this certificate safe—you cannot file without it. The counselor will help you understand what to do before filing Chapter 7 and whether bankruptcy is your best option.
Some approved agencies offer online sessions, making it convenient to fulfill this requirement. However, choose only agencies approved by the U.S. Trustee Program at justice.gov/ust to ensure your certificate is valid.
Document Collection: Gather Financial Records Systematically
Collecting comprehensive financial documentation is among the most important things to do before filing Chapter 7. You’ll need extensive paperwork covering your income, expenses, assets, and debts from the past several years.
Income Documentation Required
Gather pay stubs from the six months before filing, tax returns for the past two years, and any additional income records. This includes unemployment benefits, Social Security payments, rental income, and business earnings. Self-employed individuals need profit and loss statements, business tax returns, and bank statements.
The means test uses your average monthly income over the six months before filing to determine Chapter 7 eligibility. Accurate income documentation ensures proper calculation and prevents dismissal.
Asset and Debt Records
Compile a complete list of all assets, including real estate, vehicles, bank accounts, investments, and personal property. Include current values and any liens or mortgages. For debts, gather statements for credit cards, loans, medical bills, and other obligations.
Don’t forget less obvious assets like tax refunds, insurance policies with cash value, or pending legal claims. Hiding assets is bankruptcy fraud and can result in criminal charges.
Strategic Timing: Avoid Pre-Filing Mistakes
What to do before filing Chapter 7 includes careful timing of certain financial decisions. Avoid large purchases, cash advances, or luxury spending in the 90 days before filing. These transactions may be considered fraudulent and could prevent discharge of those debts.
Similarly, don’t pay certain creditors preferentially. Payments over $600 to any single creditor within 90 days of filing (or $6,825 to insiders within one year) may be recovered by the trustee as preferential transfers.
Stop using credit cards entirely once you decide to file. Charges made without intent to repay constitute fraud. Focus on necessary living expenses only and document your financial hardship clearly.
Legal Consultation: Understand Your Rights and Options
Consulting with a qualified bankruptcy attorney is one of the wisest things to do before filing Chapter 7. An experienced attorney can evaluate your specific situation, explain exemptions available in your state, and identify potential complications.
Attorneys help maximize exempt property, ensuring you keep essential assets like your home, car, and retirement accounts. They also identify whether Chapter 13 might be more beneficial and handle complex legal requirements.
Many attorneys offer free consultations and payment plans. The cost of legal representation often pays for itself through proper exemption planning and avoiding costly mistakes.
Final Preparation: Complete Your Petition Accurately
The final step in what to do before filing Chapter 7 involves completing your bankruptcy petition and schedules accurately. These forms require detailed information about your income, expenses, assets, debts, and financial history. You can find official bankruptcy forms and filing requirements at uscourts.gov/forms/bankruptcy-forms.
Double-check all information for accuracy. Errors or omissions can delay your case or result in dismissal. Include all debts, even those you’re unsure about—it’s better to list questionable debts than omit valid ones.
Sign your petition under penalty of perjury only when you’re confident all information is complete and accurate. Once filed, amending your petition requires additional court filings and potential complications.
Take Action Now: Protect Your Financial Future Today
Don’t let overwhelming debt control your life any longer. Understanding what to do before filing Chapter 7 bankruptcy puts you on the path to financial freedom. Contact our experienced bankruptcy team today for a free consultation and personalized guidance through every step of the process.
Frequently Asked Questions
1. How long does Chapter 7 preparation take?
Most people need 4-8 weeks to gather documents, complete credit counseling, and prepare their petition properly. Rushing the process often leads to mistakes and delays.
2. Can I file Chapter 7 without an attorney?
While legally possible, filing without an attorney significantly increases your risk of errors, lost exemptions, and case dismissal. Professional guidance is highly recommended.
3. What happens if I forget to list a debt?
Unlisted debts typically aren’t discharged in Chapter 7. However, you can amend your petition to include forgotten debts, though this requires additional court filings.
4. Do I need to stop paying all bills before filing?
Continue paying secured debts (mortgage, car loans) if you want to keep the property. You can generally stop paying unsecured debts like credit cards and medical bills.
5. How much does Chapter 7 bankruptcy cost?
The court filing fee is $338, plus credit counseling costs ($10-$50) and attorney fees (typically $1,000-$2,000). Many attorneys offer payment plans to make representation affordable. Current filing fees and fee waiver information are available at uscourts.gov/services-forms/fees.
Key Takeaways
- Complete mandatory credit counseling from an approved agency within 180 days of filing
- Gather comprehensive financial documentation including six months of pay stubs and two years of tax returns
- Avoid large purchases, cash advances, and preferential creditor payments before filing
- Consult with an experienced bankruptcy attorney to maximize exemptions and avoid mistakes
- Complete your petition accurately and include all debts and assets to prevent complications
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