In this section about filing bankruptcy under Chapter 7, you will learn about:
- Chapter 7 bankruptcy timeline
- Chapter 7 bankruptcy means test
- Chapter 7 bankruptcy options for you
- Credit counseling requirements and Chapter 7 bankruptcy
- Automatic stay as a means to protect yourself from creditors
- Your responibilities in getting your bankruptcy discharge
- Exemptions and Chapter 7 bankruptcy
- Secured debts and ways to keep your car and other assets
- Final step in Chapter 7 bankruptcy
- Understanding Chapter 7 bankruptcy fees
- Discuss your case with a local bankruptcy lawyer
Chapter 7 Bankruptcy: Define it for Me.
Do you find it difficult to pay your credit card bills in full every month? Are medical bills, payday loans and other such debts making you feel stressed and unsure if you can ever get ahead, even though you are doing your best to pay them? If you answered yes to these questions, Chapter 7 bankruptcy may be an option for you. Chapter 7 bankruptcy, by definition, involves the liquidation of an individual’s non-exempt assets to settle debts with creditors. The term “liquidation” can be confusing, however, since most people who qualify for Chapter 7 bankruptcy often do not have any non-exempt assets, so an actual liquidation does not take place. You must pass a means test in order to qualify for Chapter 7 bankruptcy.
It is important to find out if you are eligible to file Chapter 7 bankruptcy, and to learn how doing so can potentially excuse you from your credit cards and other unsecured debts. Getting in touch with a bankruptcy lawyer should be your first step. By filling out the free bankruptcy case evaluation form, 1-800-Bankruptcy can quickly connect you with a bankruptcy lawyer in your area who can provide you with the information you need, and explain how Chapter 7 bankruptcy may be right for you and your situation.
Chapter 7 Bankruptcy: What is the Time Frame?
In most instances, Chapter 7 bankruptcy cases are resolved quickly, and you may obtain your discharge in as little as a few months. A discharge eradicates your unsecured debts, such as credit cards, personal loans, medical bills, and judgments as a result of automobile accidents; delinquencies on repossessed items such as a car, older tax debts, payday loans, and garnishments. It is important to know before filing Chapter 7 bankruptcy that certain debts are not able to be purged. These debts are classified as “non-dischargeable debts". In these instances, the debt may not be discharged, or may only be discharged under very specific situations. Some examples of “non-dischargeable debts” are child support, most student loans, and several types of tax debts.
What is the Chapter 7 Bankruptcy Means Test, Why should I take it?
In order to file for Chapter 7 bankruptcy, you must first qualify. By taking a Chapter 7 means test, you will have your answer immediately. This saves you time and hassle before proceeding further. In recent years, since the introduction of the means test in 2005, the media has skewed the view regarding who will qualify, giving more attention to who will not. The fact is, more than 96% of potential Chapter 7 requestors who took the means test qualified for Chapter 7. It is unlikely that you would not qualify, but in the event you don’t, filing bankruptcy may still be an option; you may still qualify for Chapter 13 bankruptcy.
What is the “means test”? The simple, two-step process of the Chapter 7 means test starts with a median income assessment. This means the first step of the Chapter 7 bankruptcy means test compares your monthly income to the median income in your state for the same amount of people as you have in your family. If your earnings are at or below the median income in your state, you qualify for Chapter 7 bankruptcy. If your earnings are higher than your state’s median income level, it does not necessarily mean you do not qualify, but rather initiates the second step of the test.
The second step of the Chapter 7 means test calculates your disposable income and unsecured debts. Barring that your disposable income over the tnext five years does not exceed $6,000 ($100/month), you qualify for Chapter 7 bankruptcy, and may file accordingly. A bankruptcy attorney in your area can further clarify how disposable income is calculaed. It is possible to still qualify for Chapter 7 bankruptcy protection if your disposable income is more than $6,000 but less than $10,000 depending upon what are considered allowable expenses for you and your family.
Should you file bankruptcy?
If you have questions about whether filing bankruptcy is right for you, answer them by clicking here. You can also fill out our free online bankruptcy case evaluation form or call us at 1-800-7100-LAW. We are here to help. We’ll assist you in scheduling a free consultation with a Chapter 7 bankruptcy attorney in your area who will evaluate your current fiscal situation, explain your legal rights and further discuss why Chapter 7 bankruptcy may be the right choice if you:
- Have little or no income
- After paying your necessary living expenses, have little or no money left over each month
- Rent your residence, or have little or no equity in your home
- Have few, if any, assets aside from furniture, clothing and other such necessities.
You Must Receive a Briefing from a Credit Counseling Agency Before Filing your Chapter 7 Bankruptcy Case.
It is required by law that you attain a Credit Counseling Briefing from a certified credit counseling agency before you are able to file bankruptcy, whether you are filing Chapter 7 bankruptcy or Chapter 13 bankruptcy. This allows certified credit experts to explain fiscal responsibility and management, as well as how to create a personal budget analysis. They will also discuss alternatives to filing for bankruptcy with you. Pending financial hardship exceptions, most debtors who are petitioning for bankruptcy must go through this process before filing; failing to do so, in most cases, will result in your case being DISMISSED. Your Chapter 7 bankruptcy attorney may suggest an approved Counseling Agency, or you can procure an approved Credit Counseling Briefing online at www.StartFreshToday.com.
Filing for Bankruptcy Can Protect You from Your Creditors
You can be steps closer to a fresh financial start by following these steps. It is important to provide all of the necessary information, as this makes starting over financially a very real possibility. You must first complete your credit counseling session from an approved Credit Counseling Agency, followed by providing your bankruptcy attorney all of the necessary information required for filing. Your attorney will then assess your situation, and prepare a bankruptcy petition. Information that must be disclosed on your bankruptcy petition includes personal information, all of your income, any assets you have, your expenses and your debts, as well as any related schedules and forms. You must also include any relevant exceptions to which you are entitled.
It is essential that you make known all of your debts when petitioning for Chapter 7 bankruptcy. Failing to do so, whether intentionally or unintentionally, can result in criminal prosecution, as bankruptcy fraud is a very serious offense.
Once you have disclosed your information to your attorney and he/she has prepared your bankruptcy petition, your lawyer will officially file the petition in local bankruptcy court. The court will then assign a bankruptcy trustee to your case. Once bankruptcy has been filed, an "Automatic Stay" is generally entered in most cases to prevent creditors from taking any further action against you outside of bankruptcy court.
You Must Do Your Part in Obtaining Your Bankruptcy Discharge
It is essential that you adhere to the advice of your attorney. Do NOT attempt to hide any property, conceal or destroy any financial records or make last-minute charges in large amounts on your credit cards before filing for bankruptcy. Remember, you may only file for Chapter 7 bankruptcy once in 8 years. It is crucial that you know and understand the Chapter 7 bankruptcy timeline, and commit to making responsible financial decisions in the future.
Certain Property is Protected from Creditors through Chapter 7 Bankruptcy Exemptions
As mentioned earlier, bankruptcy by definition means the liquidation of one’s non-exempt assets to pay creditors. The important thing to remember is that most people filing for Chapter 7 bankruptcy protection have very few, if any, non-exempt assets. Property that is exempt from liquidation in bankruptcy varies state to state, but typically includes your primary residence, tools/work equipment, your car, personal property and several other categories of property as defined by the law. Creditors are not allowed to take these things from you to satisfy any debts.
Most of the time, Chapter 7 bankruptcy exemptions protect all of your property. Any property that is not exempt can be liquidated by your court-appointed trustee to pay your creditors. This will generally only happen if your non-exempt assets are worth enough to monetarily satisfy the amount owed to your creditors.
Reaffirm Secured Debts – Keep Your Car and Other Assets
It is important to remember that Chapter 7 bankruptcy helps eliminate unsecured debts. Secured debts are not eliminated. An example of a secure debt is a car loan, meaning if you plan to discharge your car loan, you must give the car back as well.
However, it is possible to keep your car, or other assets that serve as security for a debt, by negotiating a reaffirmation agreement with your creditors in Chapter 7 bankruptcy. If your creditors are willing to reaffirm your debt, you are making a commitment to continue making the payments on the loan, for the right to keep the property you are paying for.
The Last Step in Filing Chapter 7 Bankruptcy
As required by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, you must complete and approved Debtor Education Course before getting your bankruptcy discharge. The Debtor Education Course is a personal financial management course aimed at educating you in preventing the need for bankruptcy in the future. You may get a referral from your bankruptcy attorney about where to attend an approved financial management class, or you can procure an approved Debtor Education Course online at www.StartFreshToday.com.
How Much Will it Cost To File for Chapter 7 Bankruptcy?
If you qualify for Chapter 7 bankruptcy, you might be wondering how much it is going to cost you to file. View current Chapter 7 bankruptcy fees right here. (Note that Chapter 7 bankruptcy fees are subject to changes that will be listed on the website of the U.S. Bankruptcy Court).
A Fresh Financial Start May Be Just Around the Corner
Whether you are filing Chapter 7 or Chapter 13 Bankruptcy, the decision is obviously not one to be taken lightly. This is a big decision and one you should be sure of before deciding to file. If you are in a financial situation that does not appear to be getting better, or has little chance of improving, filing for bankruptcy may be the light at the end of the tunnel. Broad protection against creditors, control of your financial life and rebuilding your credit after bankruptcy with the help of friendly lenders are real and encouraging possibilities.
You do not have to live in fear of creditors. You have the power to regain your financial control with the help of an ABC Bankruptcy professional. Call today about how filing bankruptcy can help you. Our number again is 1-800-710-0529. Don't live another day in financial torment. You may also use our secure
online case evaluation form. Our bankruptcy professionals will review your situation and contact you for a free, no-obligation consultation.