Chapter 7 Bankruptcy: The Basics

Today’s economic climate has caused many families and individuals to feel trapped by debt and struggling to make ends meet. Whether you have been laid off, accumulated medical debt, or accumulated credit card debt, debt can make life incredibly difficult and stressful. Bankruptcy may be an option for you to start fresh with your finances. Are you prepared to take control of your finances and free yourself from the harassment of debt collectors? If so, then filing a Chapter 7 Bankruptcy may be right for you.

A Chapter 7 Bankruptcy allows you to wipe out most debt and start fresh. This type of bankruptcy is a liquidation of your assets by a trustee. The trustee then sells all of your non-exempt assets. The proceeds of the liquidation are distributed to your creditors in satisfaction of your debt. The trustee will take a commission for overseeing the liquidation and asset distribution. Certain debts are classified as non-dischargeable. This type of debt includes student loans, fraudulent debts, alimony, child support, any fines for legal violations, tax debts, debt for personal injury or death caused by driving under the influence of alcohol or controlled substance, or any debt you forget to list in your bankruptcy filing. You will be responsible for paying these debts in full.

The filing of a Chapter 7 Bankruptcy does not require you to surrender all of your assets. Generally, you may keep your home, car, clothing, furniture, employer retirement plans, etc. An experienced attorney can help you determine which assets you must turn over and which you may keep.

If you plan to file a Chapter 7 bankruptcy, you must pass the California means test. This test applies to higher income bankruptcy filers, which means that if your income is below the required median, you will be exempt from this test. Other exemptions from the California means test include those whose debts are primarily consumer and disabled veterans who incurred debt while actively serving in the military. In order to be exempt from the means test, for example, an individual in a one-person household must have an income below $47,798.00.

The basic process of filing a Chapter 7 Bankruptcy is fairly straightforward and consistent. First, you must complete a bankruptcy petition, provide all necessary documentation, and complete a credit counseling course. After these initial requirements, you can then file a Chapter 7 bankruptcy. Approximately one month after filing for a Chapter 7, a Meeting of Creditors is held, where a trustee is appointed. Prior to the conclusion of your bankruptcy proceedings, you must also take a second course in financial management. After the Meeting of Creditors, unless there are any outstanding problems with your filing, no further action will be required from you. Approximately two months following the Meeting of Creditors, you can expect a court order discharging your debt.

Contact an Experienced Attorney

If you are considering Chapter 7 Bankruptcy as a means to rid yourself of crippling debt and get a financial fresh start, the first step is to consult an attorney to ensure this is the correct path for you. The knowledgeable attorneys at the Leslie Legal Group are here to help guide you through every step of the bankruptcy filing process. Contact us today for a consultation.