Chapter 7 Bankruptcy

Chapter 7 is straight bankruptcy, filed to wipe out all of your debts and get a fresh start.  In most cases, you will be in and out of bankruptcy in 90 days, assuming that your case is filed and executed flawlessly by an experienced attorney.  It is frequently referred to as a credit card bankruptcy because your lawyer will typically recommend this type of filing in order to eliminate credit card debt.  It is also very useful for eliminating accounts in collection, 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 most cases, you will keep your home, cars, and other assets, provided that your assets are covered by your applicable bankruptcy exemptions.  If you are behind on your home loan or car loan and want to keep your home or car, you will have to get current before you file.  If you are unable to get current and still want to keep your home or car, you will have to file a Chapter 13 repayment bankruptcy and repay your missed payments over a 3-5 year period.

How a Chapter 7 Lawyer Determines If You Can 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 case filed to discharge personal debt is referred to as a consumer bankruptcy.  If you need to file mainly to discharge business debt, then your case is classified as 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 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 a limit on how much money you can earn and still file under 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 automatically pass.  If your income is slightly higher than the median income, a skilled Chapter 7 attorney may still be able to get you to pass with some skillful lawyering.  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 test.  If you cannot pass, then you will have to file under Chapter 13 and repay some or all of your debt 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 case 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 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 Process Works

In San Diego, the Chapter 7 process takes about 90 days, from start to finish, assuming that it is executed flawlessly by your lawyer.  If you hire an experienced San Diego Chapter 7 bankruptcy attorney, there is no reason why your Chapter 7 bankruptcy 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 discharge of your debts, and your case will be completed.

Meeting of Creditors

In San Diego, about 30 days after your attorney files your Chapter 7 case, a Meeting of Creditors will be held.  The meeting will be before a trustee, 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.

Discharge

About 90 days after your case is filed, you will receive a Court order called a discharge, which operates to eliminate your debts.  The discharge order eliminates your personal liability for debts that can be eliminated under bankruptcy law.  This generally includes most debts other than recent taxes, student loans, and debts incurred through fraud.

Consultation

Call Bankruptcy Legal Center today to set up your free consultation with a Chapter 7 lawyer to determine if filing Chapter 7 bankruptcy is the right solution to help you and your family get out of debt San Diego.  Call us at 619-501-9711 .

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