Ch. 7 Bankruptcy

WHAT ARE THE ADVANTAGES OF BANKRUPTCY?

If you are behind in paying your debts, whether they are secured debts like a mortgage or car payment, or unsecured debts like credit cards, utilities or taxes, a bankruptcy can eliminate or reduce the amount of the debts, or may provide the time needed to get caught up.

When you file bankruptcy, most actions against you are automatically stayed. The phone calls from creditors should stop. The letters filling your mailbox should stop. The lawsuits to get a judgment stop. The garnishments stop. The foreclosure stops. You get a moment of peace. There are some things that don’t stop, however. Criminal proceedings generally proceed. Proceedings based upon failure to make support payments can generally proceed. However, the stay is not permanent and can be terminated upon the motion of a creditor.

All individuals are entitled to exempt property from their bankruptcy, that is, this is stuff a debtor gets to keep. There are two sets of rules to determine exempt property, and a debtor gets to pick one. If you have equity in your home, the California non-bankruptcy exemptions may protect up to $175,000 in your value in your home. If you do not own your home, the California bankruptcy exemption may allow you to spread almost $27,000 in value over any kind of property you own. A good lawyer knows which set to pick and how to assign the amounts of the exemption.

There are four types of bankruptcy (chapters as we lawyers call them) that are available to individuals: Chapter 7, 11, 12 and 13. We discuss them under their headings. If bankruptcy is not right for you, we have various alternatives which can offer assistance in resolving your debt matters.

WHAT IS CHAPTER 7 BANKRUPTCY

Chapter 7 is a liquidation bankruptcy: all non-exempt property is turned over to the Chapter 7 trustee who sells it and distributes the proceeds to your unsecured creditors pro rata.

Chapter 7 eliminates different types of unsecured debts, such as medical bills, credit cards, store cards, utility bills, and more—basically, most debt not tied to property. Like all bankruptcies, the automatic stay caused most actions to stop.

Certain debts are not discharged in a Chapter 7, including spousal or child support debts, most types of taxes, student loans, and, if a creditor seeks that determination, debts incurred as a result of fraud or false information in a written financial statement, theft or embezzlement, or caused by willful and malicious injury.

There is a “means test” debtors take to determine if Chapter 7 bankruptcy can be filed on your behalf.

WHAT ABOUT DEBT TIED TO PROPERTY?

Secured debts are generally not affected by a Chapter 7: if you want to keep the house or the car, you must make the payments. However, Chapter 7 may even buy you time to negotiate a new payment plan with your mortgage lender or auto loan company. This could help you keep your home or car while obtaining relief from other debts. If, on the other hand, you want to surrender your car or home, you can do so without future liability.

HOW LONG DO CHAPTER 7 BANKRUPTCY CASES LAST?

In most cases, you may be able to have your eligible debt discharged within four to six months. If your main goal is to have debts discharged as fast as possible, Chapter 7 bankruptcy is your best option. When you file for Chapter 7 bankruptcy protection, a trustee will inventory assets and liquidate anything that is not protected under state law. Whatever money can be obtained through liquidation is then distributed to creditors with any outstanding debt balances forgiven forever. If you need help with overwhelming unsecured debt, you can call Rick today. During your free consultation, he may be able to show you how filing for Chapter 7 bankruptcy can help you obtain financial relief without having to dip into an IRA or other savings accounts. Rick welcomes the opportunity to discuss your specific situation and how you may benefit from Chapter 7 bankruptcy. CALL RICK TODAY FOR A FREE CONSULTATION AND FIND OUT IF CHAPTER 7 IS FOR YOU.