Lake Forest Bankruptcy
27031 Vista Terrace #209
Lake Forest, CA 92630
Phone: (949) 218-2002
Fax: (949) 315-3212
avaesq@lakeforestbkoffice.com
CHAPTER 7 BANKRUPTCY
Chapter 7 bankruptcy is sometimes called "liquidation" bankruptcy -- it cancels your debts, but you might have to let the bankruptcy court liquidate (sell) some of your property for the benefit of your creditors. ("Chapter 7" refers to the chapter of the federal Bankruptcy Code that contains the bankruptcy law.)
The whole Chapter 7 bankruptcy process takes about four to six months. Legal fees will vary based upon the complexity of the case. The court charges $299 in filing fees, the credit counseling course costs $55, and commonly requires only one trip to the courthouse.
To file for bankruptcy, you fill out a petition and a number of other forms and file them with the bankruptcy court in your area. Basically, the forms ask you to describe:
* your property
* your current income and monthly living expenses
* your debts
* property you claim the law allows you to keep through the bankruptcy process (called "exempt property") -- most states let you keep some equity in your home, clothing, household furnishings, Social Security payments you haven't spent, and other necessities such as a car and the tools of your trade.
* property you owned and money you spent during the previous two years, and
* property you sold or gave away during the previous two years.
An individual or business entity may file a Chapter 7 Bankruptcy Case. An entity who has not filed for and received a discharge in another Bankruptcy Case under Chapter 7 within the last 8 years.Under the old bankruptcy rules, the bankruptcy judge had the power to dismiss a Chapter 7 case if he or she thought the debtor had sufficient disposable income to fund a Chapter 13 repayment plan. There were no hard and fast rules dictating when a judge should dismiss a case on these grounds -- it depended on the facts of the case and the attitude of the judge.Now that the new bankruptcy law has gone into effect, however, there are clear criteria that dictate who will be allowed to stay in Chapter 7 bankruptcy -- and who will be forced to use Chapter 13 bankruptcy if they want to file. Disabled veterans whose debts were incurred during active duty and people whose debts come primarily from the operation of a business get a fast pass to Chapter 7. All others must meet the requirements set out below.Under the new rules, the first step in figuring out whether you can file for Chapter 7 is to measure your "current monthly income" against the median income for a family of your size in your state. Your "current monthly income" is your average income over the last six months before you file. If your income is less than or equal to the median, you can file for Chapter 7.If your income is more than the median, however, you must pass "the means test" -- another requirement of the new law -- in order to file for Chapter 7.The purpose of the means test is to figure out whether you have enough disposable income, after subtracting certain allowed expenses and required debt payments, to repay at least a portion of your unsecured debts over a five-year repayment period.Before filing a Chapter 7 Bankruptcy, you want to make sure that you will not lose your assets when you file your Bankruptcy case. A Chapter 7 Bankruptcy case, once initiated by the Debtor, may not be voluntarily dismissed by the Debtor. If you have assets that could possibly be liquidated by a Chapter 7 Trustee, then you need to be absolutely sure you are comfortable with that result once you file the Bankruptcy case. In some cases, that might mean you aren't going to file your Chapter 7.Some taxes may be discharged in Bankruptcy, some may not. The determination of whether a tax may be discharged in Bankruptcy, is very time and condition sensitive. Sometimes you may need to wait to discharge a tax in Bankruptcy, or file a tax return if any are missing. Based on the means test, or the disparity between your income and expenses, you may be forced into filing a Chapter 13 if you file a Chapter 7. If you know that will be the result, you should not file the Chapter 7.If you don't want to be honest on your petition that you are filing with the United States Bankruptcy Courts, you don't want to file a Bankruptcy Case. All declarations you are making in your case under the penalty of perjury of the laws of the United States. If your debts are mainly of the type that require a judgment, the next question is whether you have any income or property that your creditors can seize if they go to the trouble of obtaining a judgment. For instance, if all of your income comes from Social Security (which can’t be levied upon by creditors), and all of your property is exempt, there is nothing your creditors can take from you to satisfy their judgment. That makes you "judgment proof."Most unsecured creditors are required to obtain a court judgment before they can start collection procedures, such as a wage garnishment or seizure of personal property. (Collections for taxes, child support, and student loans are exceptions to this general rule.)A typical Chapter 7 bankruptcy case is opened and closed within three to six months, and the person filing emerges debt-free except for a mortgage, car payments, and certain types of debts that survive bankruptcy, such as student loans, recent taxes, and unpaid child support.Although you can lose property in Chapter 7 bankruptcy, most filers don't. Bankruptcy lets you keep most necessities -- if you have little to begin with, chances are good you'll be able to keep all or most of your property (unless you pledged the item as collateral for a loan).However, not everyone is eligible to use Chapter 7 bankruptcy. If your income is sufficient to fund a Chapter 13 repayment plan, after subtracting what you'll spend on certain allowed expenses and monthly payments for child support, tax debts, secured debts (such as a mortgage or car loan), and a few other types of debts, you won't be allowed to file for Chapter 7 bankruptcy.Most people choose Chapter 7, if they have a choice. Here are some reasons why:Probably the main reason most people prefer Chapter 7 bankruptcy is that it doesn't require you to repay any portion of your debts, as Chapter 13 bankruptcy does. Additionally, if you use Chapter 13 bankruptcy, you must complete the entire three- to five-year repayment plan in order to have your remaining debts discharged (unless the court lets you off the hook early, for hardship reasons). The majority of those who file for Chapter 13 bankruptcy don't complete their plans simply because they aren't addressing the problems in their lives that forced them into Bankruptcy in the first place, so filers run a very real risk that their debts won't ultimately be discharged.Lake Forest Bankruptcy.
Live Debt Free Again!
27031 Vista Terrace #209 Lake Forest, CA 92630
Phone: (949) 218-2002; Fax: (949) 325-1171
Licensed by the California Bar, California Bar No. #228445
