Fast Results: Chapter 7 Bankruptcy

Chapter 7 bankruptcy, also known as liquidation, is perhaps the fastest and most affordable way to end debt. The filing process takes three to six months and is quick. Filing for Chapter 7 means your assets are liquidated and your debts paid off or erased. With a Chapter 7 filing you do not have to repay everything that you owe. Most Chapter 7 cases are resolved in fewer than four months. Most people feel an immediate sense of relief once they file and can begin with a fresh start in days and weeks after the initial filing.

An Automatic Stay Stops Creditors Instantly

Once you contact a bankruptcy attorney he or she will enact an Order of Relief and an automatic stay. This is a legal action which prohibits creditors from contacting you. By law, creditors must stop contacting you. Once an automatic stay is active, creditors can no longer garnish your wages. Creditors are also prohibited from accessing you bank account, and cannot take possession of your property including your house and car.

Chapter 7 Requirements:

  • Meet the requirements of the "means test"
  • Go to credit counseling classes
  • Liquidate all nonexempt assets or those encumbered by a lien

The "Means Test"

There are two parts to a means test. The first step compares your average monthly income for the six months before filing for bankruptcy with California's median family income.

The second step is taken if you make more than California's median income. If, after deducting all allowed expenses, your disposable income is enough to pay some portion of unsecured debt, you may not qualify for Chapter 7 but can still qualify for Chapter 13.

You may still, under the advisement of you attorney, apply for Chapter 7 under "special circumstances," such as a serious medical condition, recent unemployment or high rent.

Which Property Is Exempt?

Most of the property you own is most likely protected and exempt. For example, your clothing and furniture most likely do not have much equity. Social Security, retirement funds and tax refunds are not counted as disposable income. An experienced bankruptcy attorney will accurately assess what you can keep and what can be liquidated. Additionally your attorney will negotiate with creditors and will work with your appointed trustee to ensure that all of your exempt property is retained.

Which Debts Are Discharged?

Chapter 7 offers the cancellation of debt including:

  • Credit card debt relief
  • Medical bill relief
  • Home energy bill relief
  • The discharge of personal loans

Chapter 7 does not get rid of child and spousal support, tax debts, criminal fines or student loans. If you earn more than the state's median income, you may be required to file a Chapter 13 instead. Call lawyer Justin D. Irish in Costa Mesa at 949-836-0543 or fill out the online contact form today. Serving all of Orange County, California.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.