Chapter 7 Bankruptcy
Chapter 7 bankruptcy protects debtors from creditors in the collection of debt. It essentially discharges (eliminates) credit card debt, medical bills, and other unsecured debt. Chapter 7 bankruptcy does not affect secured debts (i.e., mortgages, auto loans, etc…) unless you are planning on returning the secured item (i.e., your home or vehicle). In order for you to keep these assets (your home or your car), you must continue to pay your mortgage and car note. Otherwise, the creditor will be entitled to repossess it.
A great majority of Americans file chapter 7 bankruptcy to eliminate credit card debt. Although Chapter 7 bankruptcy is the right solution, you must quality to file for Chapter 7. In order to quality, there are certain tests that one must pass. The first test, called the income and expense test, calculates whether you have excess income left over at the end of the month to pay a portion of your debt. Generally, you must demonstrate to the bankruptcy court that your expenses on a given month meet or exceed your income on a given month in order to qualify to file for Chapter 7. Should there be excess income of approximately $150 per month, the bankruptcy trustee will not allow you to move forward with a Chapter 7. The court will either dismiss your case or request that you convert your case to a Chapter 13 bankruptcy. To best determine whet you qualify to file, you should speak to a bankruptcy lawyer.
Once you have passed the first hurdle, the second hurdle is to pass the “Means Test”, which is based on your income and the amount of dependants living in your household versus the median income for the area that you live in. This particular test is designed to prevent individuals with high level of income to file for Chapter 7 bankruptcy and eliminate unsecured debt (i.e., credit card debt). Once you pass these two tests, you generally qualify to file for Chapter 7 bankruptcy.
However, the next consideration is to determine whether your assets are protected after you file. During a Chapter 7 bankruptcy, the debtor is allowed to keep certain assets, if not all. These are usually considered exempted wherein they cannot be liquidated by the bankruptcy trustee to use as payment for debts. Such properties are clothing, household goods, things used for work, equity in your home or car, and retirements, etc…. However, those who plan to file should consult a bankruptcy attorney before proceeding in order to determine whether these assets are able to be kept by the debtor.
The next step to filing for bankruptcy is to take a two courses – one that is taken prior to filing of the bankruptcy petition and the other is taken after the petition is filed. Both courses are required in order for you to receive a discharge. Failure to take these courses will cause your bankruptcy case to be dismissed.
Approximately, one month after the filing of a chapter 7 bankruptcy, you will be in front of a bankruptcy trustee. This individual shall ask you several questions under oath and the examination should not take more than 5 minutes. Should everything go well during the examination, there is very little that you must do afterwards. It takes approximately 4 to 5 months before you will receive a discharge from the bankruptcy court. Once you receive a discharge, you are no longer able to file another Chapter 7 bankruptcy for 8 years.
If you wish to know more about filing for bankruptcy, feel free to contact Los Angeles Bankruptcy Attorney Alon Darvish for a free no obligation confidential consultation. You may reach Mr. Darvish at (800)921-6513.
Contact the Law Offices of Alon Darvish if you are considering on filing for Chapter 7 Bankruptcy and need skilled legal counsel.
Free Confidential Bankruptcy Consultation
