What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is often referred to as “liquidation” bankruptcy. This form of bankruptcy is normally best suited for people with low to moderate incomes and large amounts of unsecured debt. Filing for Chapter 7 bankruptcy will eliminate this type of debt without having to pay for it. The process typically only lasts four to six months to completion. However, there are limits on who can file for Chapter 7 bankruptcy.
Who Can File for Chapter 7 Bankruptcy?
To qualify for Chapter 7 bankruptcy, you must pass the Means Test. The Means Test is used to determine whether your household income is at or below the maximum income level in California. If you are above that threshold you may still qualify under certain circumstances. If you would like assistance determining if you qualify, speaking with an experienced bankruptcy lawyer in Los Angeles who can guide you through the process.
What is the Process of Filing for Chapter 7 Bankruptcy?
After you file the case, you will have a meeting of creditors with an appointed trustee. During this meeting, the trustee will review your petition, ask questions to verify if everything is accurate, and determine whether there are any assets to liquidate.
The standard Chapter 7 bankruptcy timeline is as follows:
- Within 180 days prior to filing complete an approved credit counseling course
- Meet with our staff (typically done virtually) to prepare and file your bankruptcy petition
- Attend a mandatory meeting of creditors
- After the meeting, complete any reaffirmation agreements within 45 days
- Complete a debtor education course
- Receive your discharge order within 3 to 5 months after filing
What are the Advantages of a Chapter 7 Bankruptcy?
Immediately upon filing for Chapter 7 bankruptcy you are protected from your creditors. An automatic stay prevents creditors from collecting debt from you while you are in the case – creditors cannot call you, garnish you, pursue any lawsuits against you, or repossess your property without seeking court permission.
In addition to this protection, you will be able to eliminate your eligible unsecured debt, including:
- Credit Cards
- Medical Bills
- Personal or Payday Loans
- Utility Bills
- Judgments and Lawsuits, and
Will I Lose My Property if I File Chapter 7 Bankruptcy?
Although Chapter 7 bankruptcy is a liquidation chapter, in practice it is very rare for the trustee to sell your property. Under California law, you are afforded certain exemptions that prevent the trustee or creditors from doing this. The most common exemptions (up to a certain monetary value limit) include:
- Some personal property
- Motor vehicles
- Necessary wearing apparel
- Residential property homestead exemption
- Social security benefits
- Pension and retirement accounts
- Proceeds from a lawsuit stemming from personal injury
Additionally, if you are financing a vehicle and would like to keep it you may do so through the “reaffirmation” process. If you are up to date on your car payments and continue to pay it while in the case, the creditor may allow you to keep the car and sign a new contract with them under the same terms you had before filing. You can also decide to surrender the car and eliminate the outstanding debt.
Contact Our Los Angeles Chapter 7 Bankruptcy Lawyers for a Free Consultation
Bankruptcy can be an overwhelming legal process. Here at Okwuosa Pulliam Law Group will help by explaining the bankruptcy types, determining your eligibility for bankruptcy, managing your bankruptcy filing, representing you at the bankruptcy hearing, and more. Our experienced bankruptcy attorney can streamline the process and improve its outcome.
Schedule Your Free Bankruptcy Consultation Today
To arrange your initial consultation call us at 310-935-9635