What Is Chapter 7 Bankruptcy?
In essence, Chapter 7 bankruptcy is a tool that can be used to discharge unsecured debt without losing certain assets. There is no payment plan as with a Chapter 13 bankruptcy. Your debt just disappears, which is why Chapter 7 bankruptcy is sometimes referred to as “fresh start” bankruptcy.
How Do I Qualify For Chapter 7 Bankruptcy?
In order to qualify for Chapter 7 bankruptcy, a person’s income must be less than or very close to their reasonable living expenses. Basically, it means you have more money going out than you have coming in, and you can’t keep up with your bills.
How Do I File For Chapter 7 Bankruptcy In Los Angeles County?
To file for Chapter 7 bankruptcy, you must fill out a petition and a number of other forms and file them with the bankruptcy court in your area. The forms ask for information about:
- Your property
- Your current income and monthly living expenses
- Your debts
Be sure to work with a Chapter 7 bankruptcy attorney in Downey, CA, to ensure your paperwork is completed accurately and filed properly.
What Happens After I File For Chapter 7 Bankruptcy In Los Angeles County?
By filing for Chapter 7 bankruptcy, you are technically placing the property you own and the debts you owe in the hands of the bankruptcy court. You can’t sell or give away any of the property you own when you file or pay off your pre-filing debts without the court’s consent. However, with a few exceptions, you can do what you wish with the property you acquire and the income you earn after you file for bankruptcy.
The court exercises its control over your property through a court-appointed person called a “bankruptcy trustee.” The trustee’s primary duty is to see that your creditors are paid as much as possible of what you owe them. And the more assets the trustee recovers for creditors, the more the trustee is paid.
About 10 days after you file, you (and all the creditors you list in your bankruptcy papers) will receive a notice “creditor’s meeting” has been scheduled. The bankruptcy trustee runs the meeting and asks you questions about your bankruptcy. In the vast majority of Chapter 7 bankruptcies, this is the debtor’s only visit to the courthouse. Make sure your rights are protected by having a Chapter 7 bankruptcy attorney in Downey, CA, by your side.
Are There Any Assets I Can Keep After Completing A Chapter 7 Bankruptcy?
The Chapter 7 bankruptcy process lets you keep some property known as “exempt property” as long as the value of the assets falls within the allowed exemption amounts.
Exempt property may include:
- Your home and/or equity in your home
- Retirement plans
- Tax refunds
- Rental property
- Household furnishings
- Social Security payments
- Your automobile
- Any tools of your trade (e.g., plumber’s tools)
Remember that these assets can only be protected in a Chapter 7 bankruptcy as long as the value of the assets falls within the allowed exemption amounts.
For example, when declaring either Chapter 7 or Chapter 13 bankruptcy in California, there is a homestead exemption of $75,000 for people under age 65. A couple or an individual with a dependent in the home can qualify for a $100,000 equity exemption.
As long as the home is within these parameters, it can be fully exempt. Most retirement plans are also exempt. For vehicles with equity, a certain dollar amount can be exempt. In some situations, even vacation homes will be exempt.
What Are The Benefits Of A Chapter 7 Bankruptcy?
- It’s quick! Most cases in Los Angeles County and elsewhere last only last 3 months.
- Credit cards and medical bills are completely erased.
- You can keep your home and your car.
- Civil lawsuits and wage garnishments stop.
- Creditors stop collection activity.
What Are The Drawbacks Of A Chapter 7 Bankruptcy?
- Creditors may be able to foreclose or repossess your home or vehicle.
- Student loans, taxes, alimony, and/or child support will not be eliminated from your debt load.
- Attorney and filing fees are paid upfront.
- A bankruptcy can remain on your credit for up to 10 years, which means you won’t be able to get a loan, a line of credit or make any large purchases.
How Can A Chapter 7 Bankruptcy Attorney Help Me?
Filing for a Chapter 7 bankruptcy may sound simple, but there are many complexities within the process. That’s why you need an experienced Chapter 7 bankruptcy attorney in Downey, CA by your side. A bankruptcy attorney in Los Angeles County can offer:
- Valuable legal advice and answers to your questions
- Representation in the courtroom and in hearings
- Complete confidentiality throughout the entire process
- Preparation of all paperwork
- Knowledge of local laws
A Chapter 7 bankruptcy attorney in Downey, CA, will know important deadlines that must be observed. If you miss a date or an appearance, then your entire case can be dismissed.
For more information on Filing For Chapter 7 Bankruptcy, a free initial consultation with a Downey, CA, bankruptcy attorney is your next best step. Get the information and legal answers you need by calling 213-583-5547 today.