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Common Concerns & Questions About Bankruptcy

Be mindful if you are filing for Chapter 7 bankruptcy

| Aug 6, 2015 | Chapter 7 |

Chapter 7 bankruptcy is one of several ways in which a person under the burden of overwhelming debt can obtain relief. As many Tyler, Texas, residents may be aware, in a typical Chapter 7 filing, all non-exempt assets of a debtor are liquidated in order to repay debtors. After those debts are repaid, the individual obtains a discharge from all debts, except for certain financial obligations — such as child support, alimony and certain non-dischargeable taxes.

In order to file for Chapter 7 bankruptcy, a debtor first needs to complete credit counseling. After the counseling sessions are completed, a debtor can either approach a bankruptcy law attorney or a bankruptcy petition preparer for filing the bankruptcy petition. Often, debtors have the impression that by not consulting an attorney they will be able to save money. As a result, they choose to file the bankruptcy petition with the help of a bankruptcy petition preparer, often not a lawyer. However, there are many instances when those debtors have been duped by false promises.

For example, one woman decided to consult a bankruptcy petition preparer after seeing a flat fee of only $250 off a website. Unfortunately, even after submitting all necessary documents, the bankruptcy petition preparer continued to make false promises, ultimately costing the woman more money.

This is not an uncommon occurrence. In fact, the United States judiciary took notice of this practice by bankruptcy petition preparers and took formal action against many of them.

Debtors planning to file for Chapter 7 bankruptcy should know that existing laws permit bankruptcy petition preparers to file on behalf of a debtor. However, those filings must be accompanied by a Declaration of Non-Attorney Bankruptcy Petition Preparer, which many preparers are unable or unwilling to provide. After considering these complications and the judiciary’s outlook toward bankruptcy petition preparers, it may be safe to say that debtors should take precautions when considering filing for Chapter 7 bankruptcy to ensure their interests and rights are protected.

Source:, “Do your research before filing for Chapter 7 Bankruptcy,” Bonita Cornute, July 21, 2015