Long Beach Bankruptcy Attorneys
Chapter 7 Bankruptcy
When you’re overwhelmed by unsecured debts like credit card debt, medical bills and unsecured loans, Chapter 7 bankruptcy may provide the relief you need. In many cases, Chapter 7 bankruptcy can put an immediate stop to debt collection activity and then eliminate the legal obligation to pay most unsecured debts in less than six months.
If debt stress is interfering with your quality of life, distracting you during the day and keeping you awake at night, you owe it to yourself to learn more about your options.
Filing for Chapter 7 Bankruptcy
Chapter 7 petitioners are required to complete credit counseling before filing. This can typically be completed in two hours or less, in person, by telephone or online.
The bankruptcy attorney uses information you provide about your income, debts and assets to complete your bankruptcy petition and schedules, which you’ll review before filing. The attorney will also serve notice on your creditors. In most cases, the automatic stay will take immediately upon filing of the petition, meaning that your creditors are ordered to temporarily stop all collection action.
You will be required to attend a meeting of creditors. During this meeting, creditors may ask you questions about your income and assets, but they usually do not.
Assuming that there are no objections or motions from creditors, you’ll complete a financial management course and your attorney will file the certificate of completion with the court and request entry of a discharge. The bankruptcy discharge is a court order and it prohibits creditors and debt collectors from attempting to collect discharged debts.
This process can often be completed in as little as four to five months, leaving you free of most unsecured debt.
Qualifying for Chapter 7 Bankruptcy
Chapter 7 bankruptcy is designed to help people eliminate unsecured debt that they are not reasonably able to repay. A means test is applied to determine whether or not Chapter 7 is appropriate. If the debtor’s income is less than the median income for a family of the same size in his state of residence, he may generally file for Chapter 7 and no further calculation is required.
Income above the median isn’t necessarily a disqualifier, but triggers a more complex calculation. Certain allowable expenses are deducted from income in order to determine how much disposable income available to make payment toward outstanding debts. Below a certain threshold, the debtor may proceed with Chapter 7. Above a certain threshold, he may not. In between those numbers lies a gray area in which further calculation is required.
When you schedule a free consultation, We’ll walk you through the means test and help you determine whether you’re likely to be eligible for Chapter 7 bankruptcy.
Choosing Chapter 7 Bankruptcy
The means test determines who is eligible for Chapter 7, but there’s more to deciding which type of bankruptcy is right for you. Key considerations include:
- The value and type of assets you own: non-exempt assets may be liquidated (sold) by the bankruptcy trustee to partially compensate creditors. However, exemptions cover many common types of property, such as a certain amount of equity in a home, a car, furniture and other basics. Thus, most people who file for Chapter 7 bankruptcy have no non-exempt assets and don’t actually lose any property.
- The nature of your debts: A successful Chapter 7 bankruptcy case will result in the discharge of many unsecured debts. Those who are plagued by large credit card balances, past-due medical bills and the like often benefit from Chapter 7. However, secured debts cannot be discharged. If your primary problems stem from secured debts such as mortgage debt, Chapter 7 may provide temporary relief when the automatic stay takes effect, but may not offer a long-term solution.
In short, those with few non-exempt assets and large unsecured debts often choose Chapter 7 bankruptcy to get a fresh financial start.
You can learn about Chapter 13 bankruptcy here.
Talk to a Chapter 7 Bankruptcy Attorney
Chapter 7 bankruptcy provides financial relief to many people who are overwhelmed by debt. To find out whether Chapter 7 might be the answer for you, schedule a free consultation. We’ll assess your financial situation and explain the pros and cons of Chapter 7 in your situation.
Don’t live with unnecessary stress for one more day. Just click the button below or call us at (562) 257-6576.