Bankruptcy is the legal process designed to help honest people eliminate all or part of their debt or to help them repay a portion of what they owe. If you are underemployed, out of work, or struggling with overwhelming debt, you may be considering bankruptcy. It’s a last resort that will affect your ability to make purchases on credit or get a loan, but it can also give you a fresh start and help you regain financial stability. It can give you the breathing room you need to start over, build a better credit score and become eligible for loans and credit.
A Chapter 7 legally discharges (wipes out) certain kinds of debts when you cannot pay them due to insufficient income. The court assigns a trustee to inventory and liquidate your nonexempt California property and pay off creditors. If you have limited or no income and can’t pay your debts, talk to a Chapter 7 bankruptcy lawyer. Speaking with an experienced attorney could help determine whether Chapter 7 would fit your needs.
Dischargeable Debt in a Chapter 7 Bankruptcy
Unlike Chapter 13, there is no payment plan with Chapter 7 bankruptcy. This process can be completed in three to six months. At the end of that time, you will be free of most of your unsecured debt and you will be ready for that “fresh start.”
Debt that is discharged in Chapter 7 includes:
- Credit cards
- Utility bills
- Medical bills
- Back rent
- Personal loans
If you are unsure whether your debt is dischargeable through Chapter 7, a seasoned bankruptcy lawyer could help.
What Are Property Exemptions in Chapter 7?
Exemptions are a critical part of bankruptcy. California allows you to choose between the wildcard and the homestead exemption schemes. This allows you to select the option that helps you protect your property the best. The law allows you to keep a certain amount of property after going through Chapter 7 proceedings. When executed properly, you can eliminate most of your debt in less than six months and still keep your primary car and home.
The goal is to help you get back on your feet while still allowing you to provide for your basic needs. Exempt property includes:
- Necessary clothing, household goods, and furnishings
- Household appliances
- Your homestead
- A portion of earned, unpaid wages
- Pensions, 401(k), retirement accounts
- Social security income and disability benefits
- Veterans benefits
Our law firm has been able to help many clients keep their homes during Chapter 7 bankruptcy!
How Do I Qualify for Chapter 7?
To prove that you are eligible for fresh start bankruptcy, you must pass the bankruptcy means test. It compares your monthly income to that of the state’s median income. If it is below that level, you may qualify for Chapter 7. The means test is a requirement in situations where more than 50% of your debt stems from consumer purchases. You must also receive credit counseling from a government-approved agency.
What Can Prevent Me from Being Eligible for Bankruptcy?
If you had a bankruptcy dismissed within the last 6 months due to:
- A court order violation
- Abuse of the bankruptcy system
- A fraudulent filing
- Requested dismissal because a creditor requested a lift of the automatic stay
The bankruptcy code prohibits individuals from filing bankruptcy repeatedly due to irresponsible purchases. You cannot file Chapter 7 bankruptcy if you have had another discharge in the last eight years. A dedicated lawyer could help you determine whether you qualify for Chapter 7 bankruptcy.
Contact a Chapter 7 Bankruptcy Attorney Right Away
The bankruptcy process can be exhilarating but it can also be stressful. Filing for bankruptcy can help you get the breathing room you need to make plans for the future. However, this is an important decision. If bankruptcy is not right for your unique situation, we will tell you.
If you are making the minimum monthly payments and struggling to stay afloat, please call us for a free consultation. We can help you inventory your assets and start thinking strategically, putting you quickly on the road to a “fresh start” and a better life. Contact Chapter 7 bankruptcy lawyer at the Law Offices of Terrence Fantauzzi and allow us to help you determine the best course of action for you.