What is Chapter 7 bankruptcy and is it right for you?

What is Chapter 7 bankruptcy?

Chapter 7 bankruptcy is the most common and usually the fastest form of consumer bankruptcy.

The Law Offices of Siles and Foster, P.C., offers a free consultation for individuals or couples considering filing for Chapter 7 bankruptcy.  The Law Offices of Siles and Foster, P.C., also accepts payment plans.  Contact us today at 530-898-9600 or www.siles-foster.com to schedule your free consultation.

Chapter 7 bankruptcy forgives most unsecured debts. Meaning debts that are not secured, such as medical bills, credit card debt and personal loans. However, some forms of debt, such as back taxes, court judgments, alimony and child support, and student loans generally aren’t eligible.

Is Chapter 7 bankruptcy right for you?

Chapter 7 makes sense when:

• You don’t have many assets.
• Your debts total more than half your annual income.
• Your debts can be discharged, or forgiven, by Chapter 7. These include debts such as medical bills, credit card debt and personal or payday loans.
• It would take five years or more to pay off your debt, even if you took extreme measures.

Some debts typically can’t be erased in bankruptcy, including recent taxes, child support and student loans. Bankruptcy may still be an option for you if discharging other kinds of debt would free up enough money to pay the debts that can’t be erased.

Do you qualify for Chapter 7 bankruptcy?

To qualify for Chapter 7 bankruptcy you:

• Must pass the means test, which looks at your income, assets and expenses.
• Cannot have had a Chapter 7 discharge in the past eight years or a Chapter 13 bankruptcy within the past six years.
• Cannot have filed a bankruptcy petition (Chapter 7 or 13) in the previous 180 days that was dismissed because you failed to appear in court or comply with court orders, or you voluntarily dismissed your own filing because creditors sought court relief to recover property they had a lien on.

How do you file Chapter 7 bankruptcy?

Most Chapter 7 bankruptcies are completed the within six months.  There are several steps when filing for Chapter 7 bankruptcy:

1. Find an Attorney: Before trying to fill out the various forms required to file Chapter 7, find a qualified bankruptcy attorney to help. Filing for bankruptcy is not a DIY situation. Missing or improperly completed paperwork can lead to your case being thrown out or not having some debts dismissed.  Several times a year The Law Offices of Siles and Foster, P.C., hears from people who have tried to do it themselves to disastrous results, costing them more money than if they had hired a qualified attorney at the outset. The Law Offices of Siles and Foster, P.C., has successfully handled numerous Chapter 7 bankruptcies and will fill out and file all necessary paperwork for you.
2. Credit Counseling: You must complete pre-file bankruptcy counseling from a qualified nonprofit credit counseling agency within 180 days before filing. When you are a client of the Law Offices of Siles and Foster, P.C., we will provide you with an online link or phone number to complete the credit counseling.  The credit counselor will then e-mail your course certification directly to the Law Offices of Siles and Foster, P.C., so that we can file it with the Bankruptcy Court for you.  Leaving you with one less step.
3. File paperwork: The Law Offices of Siles and Foster, P.C., will help with filing your petition and other paperwork. We will need for you to gather all relevant documentation of your assets, income and debts, and often need a copy of your last three years tax returns (in most cases the trustee requires review of these). The Law Offices of Siles and Foster, P.C., will run a credit report to try to ensure that all creditors have been listed in your petition.  Once your petition is filed an automatic stay goes into effect, meaning that most creditors cannot sue you, garnish your wages or contact you for payment.
4. Trustee takes over: Once your petition is filed, a court-appointed bankruptcy trustee will begin managing the process.
5. Meeting of creditors (341 hearing): The trustee will arrange a meeting between you, your lawyer and your creditors. You’ll have to answer questions from the trustee and creditors about your bankruptcy forms and finances.  Either Steve Foster or Heather Siles will personally appear at the 341 hearing with you.  We will also meet with you prior to the 341 hearing to prepare you for the hearing.
6. Your eligibility is determined: After reviewing your paperwork, the trustee will confirm whether you’re eligible for Chapter 7.
7. Nonexempt property handled: The trustee determines whether assets that are not exempt are worth selling so proceeds can go to creditors. Nonexempt property can be jewelry, or the equity in your house or car if it’s higher than your state’s exemption limit. The majority of individual Chapter 7 cases, are “no asset” cases where there is no property to sell off.
8. Secured debts: To resolve your secured debts, the property held as collateral may be ordered returned to the creditor. Or you may be able to redeem the collateral (you pay the creditor what it’s worth now) or reaffirm the debt (arrange to exclude the debt from bankruptcy and continue to pay it back).
9. Education course: Before your case is discharged, you’ll have to take a financial education course from a qualified nonprofit credit counseling agency.  Once again the Law Offices of Siles and Foster, P.C., will email you a link or provide you with a phone number to complete the course.  The course provider will then directly provide the Law Offices of Siles and Foster, P.C., with a copy of your completion certificate so that we may file it with the Bankruptcy Court.
10. Discharge: In most circumstances, three to six months after filing your petition, your case will be discharged, meaning that eligible debts are forgiven. Shortly thereafter your case will be closed.

Don’t try to go through a Chapter 7 bankruptcy alone.  The Law Offices of Siles and Foster, P.C., are here to help.  Call for your free consultation today 530-898-9600.

The Law Offices of Siles & Foster, P.C., is a is a debt relief agency, we help people file for relief under the bankruptcy code.

The information on this blog is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information on this blog is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship.