Chapter 7 Bankruptcy
Chapter 7 bankruptcy is straight bankruptcy. It is a liquidation bankruptcy filed to wipe out your debts and get a fresh start. You can be in and out of bankruptcy in 90 days, assuming your Chapter 7 case is executed flawlessly by an experienced attorney. Chapter 7 is frequently referred to as a credit card bankruptcy because your lawyer will typically recommend Chapter 7 to eliminate credit card debt. Chapter 7 can also eliminate personal loans, medical bills, and most other types of unsecured debts (debts for which your creditor does not have a lien against your assets). In a Chapter 7, you discharge (eliminate) your personal liability for all of your debts that can be eliminated under bankruptcy law. In most cases, you'll keep your home, cars, and other assets, provided your assets are covered by your applicable bankruptcy exemptions. If you are behind on your home loans or car loans and want to keep your home or cars, you'll need to get current, otherwise you'll have to file a Chapter 13 repayment bankruptcy and repay the missed payments over 3-5 years.
How a San Diego Chapter 7 Lawyer Determines If You Should File
Both individuals and businesses can file Chapter 7 bankruptcy, though it is more common for individuals to be filing under this chapter. An individual Chapter 7 bankruptcy filed to discharge your personal debt is referred to as a consumer bankruptcy or personal bankruptcy. If you need to file Chapter 7 mainly to discharge your business debt is called a business bankruptcy. If you are filing as an individual, your Chapter 7 lawyer will have to evaluate, among other things, two very important factors: (1) whether you can pass the Chapter 7 Means Test; and (2) whether you are married, and if so, whether you should file alone or with your spouse.
The Means Test
The bankruptcy laws place limits on how much money you can earn and still file for Chapter 7. The income limit is tied to the median family income in the area where you live. If you live in San Diego, then the income limit is based on the California median family income. The applicable test is called the Means Test. In order to qualify for bankruptcy under Chapter 7, you must pass the Means Test. For San Diego County residents, if your income is less than the California median family income for a household of your size, you pass the Means Test. If your income is slightly higher than the median income, a skilled Chapter 7 attorney may still be able to get you to pass the Means Test. But if your income is much greater than the median family income, it will be very difficult, even for a skillful bankruptcy attorney, to get you to pass the Means Test. If you cannot pass the Means Test, then your other bankruptcy option is to filing a Chapter 13 bankruptcy and repaying some or all of your debts over a 3-5 year period.
Married Couples
If you are married, then depending upon your circumstances it may be more beneficial for you to file a joint Chapter 7 bankruptcy with your spouse, or your Chapter 7 lawyer may determine that it is more advantageous to file separately without your spouse. For married couples filing bankruptcy, an experienced Chapter 7 lawyer can advise you whether it is in your best interests to file jointly with your spouse or separately without your spouse.
How the San Diego Chapter 7 Bankruptcy Process Works
In San Diego, the Chapter 7 bankruptcy process takes about 90 days, from start to finish, assuming that it is executed flawlessly by your Chapter 7 lawyer. If you hire an experienced San Diego Chapter 7 bankruptcy attorney, there is no reason why your Chapter 7 case should not proceed flawlessly. You'll make one appearance, with your lawyer, at a meeting of creditors, and then about 60 days later you'll receive a Bankruptcy Court discharge order, eliminating your debts, and your Chapter 7 case will be completed.
Meeting of Creditors
About 30 days after your attorney files your Chapter 7 bankruptcy case, a Meeting of Creditors will be held. The Meeting of Creditors will be before one of the San Diego bankruptcy trustees, not a judge. Creditors are allowed to appear and ask you questions but they rarely do. The trustee will usually ask you general questions such as whether you reviewed your bankruptcy papers, whether they are accurate, and whether there are any changes. In some cases, the trustee may ask more specific questions regarding your assets, debts, income and expenses. You must personally attend the meeting or else your case will be dismissed. Your Chapter 7 attorney at Bankruptcy Legal Center will attend the meeting with you to make sure the meeting goes smoothly.
Chapter 7 Discharge
About 60 days after the first date set for your Chapter 7 Meeting of Creditors (so about 90 days after filing your Chapter case) you will receive a Court order that will discharge your debts. The discharge order eliminates your personal liability for all of your debts that can be eliminated in a Chapter 7 bankruptcy.
Chapter 7 Consultation
Call Bankruptcy Legal Center today to set up your free consultation with a San Diego Chapter 7 lawyer to determine if Chapter 7 is the right solution to help you and your family get out of debt San Diego. Call us at 1 (800) 44-DEBTS (800-443-3287).
