Chapter 7 Bankruptcy
Eliminate your Debts in a Few Months
Chapter 7 Bankruptcy
Eliminate your Debts in a Few Months
What is Chapter 7 Bankruptcy?
A Chapter 7 bankruptcy offers a quick way to eliminate most debts and move on to a fresh start. Chapter 7 bankruptcy will help you eliminate most debts, including credit card bills, medical bills, past due utilities, and even some back taxes. Within a matter of months, these debts will be discharged and you will be on your way to rebuilding your financial life.
Typically, a Chapter 7 bankruptcy takes about three to four months from filing date until the bankruptcy court orders that you are no longer liable for your debts. Prior to filing your case, we will gather necessary information and documents from you and prepare a petition to file with the court. After the case is filed, you will attend a meeting before a trustee who will ask you questions about your case. For most filers, this is the only meeting they will attend and will never be before a judge.
Chapter 7 Bankruptcy Eliminates:
- Medical Bills
- Credit Cards
- Judgments
- Personal Loans
- Some Taxes
- Many other debts
- Recent taxes
- Divorce property settlements
- Child support & alimony
How does Chapter 7 Bankruptcy Work?
Filing Chapter 7 bankruptcy starts with a consultation. During the initial consultation, we will get an overview of your financial circumstances. Once we decide that Chapter 7 is the right choice for you and you hire the firm, we will begin preparing the case. We will review your income & expenses, assets, and debts, and develop a clear plan of action.
- Your Income & Expenses: Unless your debts are business-related, in order to file for Chapter 7 relief, you will need to qualify under the median income test. The first step is to determine if your 6-month average household income is below the median income for your household size. If it is, no further means testing is required. If your household income is above the median, you still may qualify after adjusting for certain expenses. The basic principle is to determine if you have enough disposable income to repay a meaningful amount to your creditors. If you can repay a meaningful amount to your creditors, you may end up filing Chapter 13 bankruptcy instead.
- Your Assets: You may have heard that Chapter 7 is a “liquidation” bankruptcy where you give up all of your assets. However, most people that file Chapter 7 will be able to keep everything that they own. This is because you are entitled to keep exempt property. Generally, if you don’t have much equity in your home or car, and don’t have many luxury items, most of your assets can be exempted. You can find more detailed information on all the categories and dollar amounts of your exemptions here.
- Your Debts: I will review your debts to see how much you owe, and whether your debts are secured or unsecured. Secured debt is a debt for which you pledged collateral to guarantee a loan. This is typically a vehicle or home loan. Typical unsecured debts include credit card debt, medical bills, income taxes, unpaid utilities, and past due rent.
Once your case is filed:
Once your case is filed, the automatic stay is in effect. The automatic stay is an injunction that stops all collection activity against you, including lawsuits, foreclosures, and garnishments. The automatic stay applies all creditors, including the government. This means an end to harassing creditor calls and collection lawsuits!
The Discharge
A little after two months from your meeting before the trustee, the court will enter an order discharging your eligible debts. While the automatic stay is a temporary injunction stopping your creditors, the discharge order is a permanent order barring your creditors from collection activity. This means that you are no longer legally responsible for those debts. If a creditor attempts to collect on a discharged debt, the bankruptcy court can sanction the punish the creditor and award you money damages.