Bankruptcy - Chapter 7


The primary purpose of Chapter 7 Bankruptcy is to give an individual a fresh start.

 

By definition, Chapter 7 is known as a total "liquidation". However, in most cases there are no assets available for creditors. Debtors are entitled to claim an exemption sometimes in excess of $100,000.00. The court will dispose all dischargeable debts under the Chapter 7 filing.


Frequently Asked Questions


What are dischargeable debts?

  • Medical bills
  • Credit card debt
  • Loan debt
  • Judgment debt

 

What are the common debts that are not dischargeable?

  • Certain tax debts
  • Alimony and child support
  • Government funded student loans
  • Debts for certain criminal orders

 

How long does the bankruptcy process take?


The bankruptcy process takes approximately four to six months.

 
What are the most common reasons people file for bankruptcy?


The most common reason people file for bankruptcy is job loss, followed by an inability to find work that will allow individuals to sustain the lifestyle they once had. Many times unexpected medical expenses that are not reimbursed by insurance or government proceeds lead to bankruptcy. Additionally, divorce, legal separation, and small business failures are other common reasons for a bankruptcy filing.


How does the bankruptcy proceeding begin?


The procedure starts with a debtor filing a petition with the bankruptcy court. The petition includes debts, claims against debtor, assets, and other related information.


What is the Chapter 7 means test?


The bankruptcy means test determines your eligibility for Chapter 7 Bankruptcy filing. This "test" was birthed by BAPCPA in 2005. The means test is in essence, a mathematical analysis of the Debtors income and qualified deductions which qualify ones eligibility for relief under Chapter 7. The means test is also based on household size and other variables. In most instances, the Debtor will qualify without fail.


Do I qualify for Chapter 7 Bankruptcy?


You cannot file for bankruptcy if the following things have happened:

  • If you obtained a Chapter 7discharge of your debt within the past 8 years
  • If you have not met the credit counseling requirements

 

Who is the trustee and what role do they play in my bankruptcy proceeding?


Trustees are government appointed officers assigned to every bankruptcy case. Debtors must cooperate with and provide the trustee with the necessary documents and financial information. The trustee will examine the bankruptcy filing for any inconsistencies. The primary goal of the trustee is to liquidate assets and distribute as much money as possible to creditors.


Will I lose all my assets including my home in a Chapter 7 Bankruptcy?


California law has exemptions which assist in making determinations as to what property and assets the debtor gets to keep. California Code of Civil Procedure 703 and 704 provides rules about exempt property.