Chapter 7 Bankruptcy

A Chapter 7 Bankruptcy is for consumers or certain businesses that wish to eliminate their debt or dissolve their operations. This gives many people the ability for a fresh start and allows them to eliminate their unsecured debts and keep exempt property. Secured debts such as home mortgage and car loans can be eliminated or discharged in a chapter 7 bankruptcy. Secured debts can be kept if payments are continued on schedule or surrendered to the lender with no personal liability.

Unsecured Debts Include:

• Credit Cards
• Charge Cards
• Medical Bills
• Utility Bills
• Personal Loans
• Pay Day Loans
• Unpaid Taxes – (minimum 3 years old)
• Lawsuits, Wage Garnishments, Judgements

Keep Exempt Property – How to Save Home and Cars When Filing

Secured debts can be kept if payments are continued on schedule. In addition, a debtor can pick one of two categories of exemption in California, depending on the amount of equity that exists and type of property owned. If the debtor qualifies, they can keep certain exempt property such as:

• Home
• Car(s)
• Home Furniture
• Alimony and Child
• Support
• Social Security Benefits
• Disability Benefits
• 401ks & IRAs
• Pensions and other Qualified Retirement Plans
• Tools of the Trade (Business)
• & More

Who Can File Chapter 7 Bankruptcy

The Means Test

Chapter 7 offers a fresh start to those who qualify. Not every consumer can file a chapter 7 bankruptcy. Since the Bankruptcy code was revised in 2005, anyone wishing to file must meet a means test. The Means test is a formula that determines if you qualify based on your income and household size. It was designed to stop debtors from filing chapter 7 bankruptcy when they had the ability to pay back their debts but choose not to do so.

The Filing Process

Initial Consultation

Call our office to schedule a Free and Confidential Chapter 7 Bankruptcy consultation with the attorney. Once the attorney is able to review your information and asses your financial situation, he will be able to discuss the various options you may have. 

Retaining Us

Once you are retained by us, you can tell all the creditors to call the law office and we will stop them from calling you. You can call us at any time during this process with questions or concerns and we will help.

Preparing the Petition

Preparing your case to be filed includes gathering certain documents such as paystubs, social security payments, disability payments, past 2 years of taxes, and any bills you may have. With the necessary documents provided, the attorney can determine if you pass the Mean’s Test and can file Chapter 7 bankruptcy.

Credit Counseling Classes (Required)

Anyone filing for bankruptcy is required to take a credit counseling course within 6 months of filing their case. This class can be completed online and does not take very long to complete. The certificate issued at the end of this class is required before you can file your case. A second class must be taken after your case has been filed. The second class is about how to budget your expenses and how to avoid debt in the future. 

After Case is Filed

Automatic Stay

The 341(a) Meeting

Once your petition is filed, the county clerk will give a date for the 341(a) Meeting that you must attend. The 341(a) Meeting is where the trustee will verify your identity and ask you information regarding your petition to ensure the information is accurate. A creditor may show up to ask questions about the status on collateral they have an interest in but this happens rarely. 

Waiting Period

After the 341(a) meeting, there is a waiting period where the creditors can file objections to the discharge if they can prove fraud. During this time, we can file motions on your behalf if needed. An example of this would be liens on your home that we may be able to remove.

Discharge

If everything goes well, you will receive a discharge letter around 3 months from the 341(a) Meeting date. This discharges all of your unsecured debts and saves you a large amount of money.