Eliminate most, if not all, of your debt in a few months while keeping your property.
Chapter 7 Bankruptcy
By far the most common form of bankruptcy, Chapter 7 is a relatively short and straightforward process that allows you to wipe out most, if not all, of your debt. Below is a brief summary of chapter 7 bankruptcy basics, but to learn about how to best address your situation, call (408) 982-3036 to set up a free consultation.
Who Can File For Chapter 7 Bankruptcy?
Chapter 7 is open to most individuals and businesses that haven’t filed a previous bankruptcy in the past 7 years. Unless you fall under one of a few exemptions (current or recent active military service, for example) you must qualify to file under chapter 7 based on your income. The primary test to determine whether or not you qualify for a chapter 7 bankruptcy is to compare your “current monthly income” to the median income in California. If you make less than the California state median, you’ll almost always qualify for a chapter 7, but don’t be discouraged if you make more. If you make more than the California state median, you have a second opportunity to qualify under the “means test.” A bankruptcy attorney knows the means test inside and out and will help you to get the best result possible. If you still don’t qualify, you can consider filing a chapter 13 bankruptcy which has some benefits not available under chapter 7.
How Does Bankruptcy Protect Me?
Chapter 7 bankruptcy improves your life in two different ways. First, as soon as your case is filed you start to receive protection from your creditors under the “automatic stay”–a court order which prohibits your creditors from attempting to collect their debt. This will stop debt collection lawsuits, foreclosures, and garnishments immediately.
Second, the bankruptcy will result in the discharge of the vast majority of your debts. That is, your balance will become $0.00. Keep in mind that some debts such as student loans, domestic support obligations, and others can’t be wiped out. Credit card, medical, and repossession debt are almost always dischargeable, though.
How Does the Bankruptcy Process Work?
The process of obtaining a discharge of your debts in a chapter 7 bankruptcy is complicated but straightforward. You’ll begin by preparing your bankruptcy petition, schedules, and a multitude of other documents for filing with the United States Bankruptcy Court near your residence. This is work done by our office based on information you’ve provided. During the process, you will take two financial management courses – one before your case is filed, and the second about a month or so after your case is filed. These courses are mandatory and only take a few hours to complete.
Rouhgly 30 days after filing your case, you’ll have your “341 Meeting,” which you will appear at with an attorney from our office. During this meeting the bankruptcy trustee, an attorney appointed to oversee your case and represent your creditors, will take a few minutes to question you about your situation and make sure things are being done properly. If you’ve hired our office, we would have taken the time prior to filing your case to make sure that you’re prepared for the questions at your 341 meeting. Creditors may also appear at the 341 Meeting, but rarely do so. Again, the 341 meeting is a short, simple matter for most people and isn’t something to be anxious about.
No sooner than 60 days after your 341 meeting, your debts are discharged. No sooner than 30 days after the debts are discharged, your case will be closed. Congratulations – at this point you’re ready to get on with your life and enjoy your fresh start.
What Do I Have To Give Up?
A chapter 7 bankruptcy is also called a liquidation bankruptcy. What that means is that, in exchange for the discharge of your debts, you are expected to surrender certain assets to the bankruptcy court so that they can be sold to pay your creditors. While the concept of a liquidation may be intimidating, don’t let it scare you. In California, we have generous exemption laws that protect the vast majority of what you own from being surrendered to the court. For example, you get to keep most, if not all of your household goods, your cars, your retirement fund, and, in many instances, your home. We can help you hold onto your things so you’re in the best position possible after your case wraps up.
How Will Bankruptcy Affect My Credit?
In the short term, filing bankruptcy will lower your credit score. However, if you’re already significantly behind on your payments, your credit score will suffer and continue to suffer. Ironically, for most people, chapter 7 bankruptcy is the quickest way to become credit-worthy again. One reason is that instead of bumping along the bottom of the credit score range with ongoing missed payments and overwhelming interest, bankruptcy wipes the slate clean and gives you a fresh starting point for your recovery.
Because you’ve wiped out your debt in a chapter 7 bankruptcy, you become a much better credit risk. Your debt-to-income ratio is dramatically better, which is vitally important to new creditors. They know that the money you’re earning will go to repay them instead of that card that you maxed out five years ago. In fact, you are so much better off that you may be able to qualify for a home loan in as soon as two years.
While the process of filing bankruptcy is straightforward, the law involved in the process is complex, nuanced, and constantly changing. Our office is dedicated to making sure that you get the best results possible.
GSL Immigration Law will provide the personalized service and attention to detail that are essential to a successful chapter 7 bankruptcy petition.
Take the first step in putting your stressful debt in the past and call (408) 982-3036 today to set up a free chapter 7 bankruptcy consultation.