California Chapter 7 Bankruptcy Lawyer
When you file for chapter 7 bankruptcy, you are allowed to discharge your debts. This means you no longer need to repay your creditors. Instead, your creditors will be paid from your assets. Chapter 7 bankruptcy is also known as a straight or liquidation bankruptcy. It is the bankruptcy type that most individuals file for when they need relief from excessive debt.
One common misconception about filing for chapter 7 bankruptcy is that an individual will automatically lose all of their possessions or set themselves up never to be able to own anything again. This is not true. Myths such as these are often perpetuated by people who have never filed for bankruptcy or by those who have a biased interest in seeing people not file for bankruptcy.
The truth is that while bankruptcy will have some negative consequences, it can also give you a fresh start — and the long-term benefits outweigh the short-term drawbacks in many cases. Connecting with a knowledgeable bankruptcy attorney is the best way to learn more about how the details of chapter 7 bankruptcy can help you and if it is the right move for your specific financial situation.
Why Do People File for Chapter 7 Bankruptcy?
Many different scenarios can lead to a person filing for chapter 7 bankruptcy. The most common reasons you might file for this type of bankruptcy are:
- Getting rid of your debt. One of the primary reasons people file for chapter 7 bankruptcy is to eliminate their debt. They often have exhausted all other options and see bankruptcy as their only way to eliminate the debt weighing them down.
- Saving your home. Home foreclosure is a real possibility for many Americans struggling with debt. If you are financially behind on your mortgage payments, filing for chapter 7 bankruptcy can give you the time you need to catch up on your payments and save your home.
- Keeping your car. If you have fallen behind on your car payments, your lender may try to repossess your vehicle. Filing for chapter 7 bankruptcy can help you keep your car by giving you time to catch up on your payments.
- Stopping creditor harassment. Creditors can be very aggressive in their attempts to collect payments. They may call you at all hours of the day, show up at your door, or even threaten you with lawsuits or wage garnishment. Filing for chapter 7 bankruptcy can end creditor harassment by providing you with legal protection from your creditors.
- Starting fresh. Bankruptcy can provide you with a fresh start by allowing you to discharge your debts and rebuild your credit. If you are facing unmanageable debt, filing for chapter 7 bankruptcy can help you get your financial life back on track.
- Stopping wage garnishments. If you are struggling to keep up with your debt payments, your creditors may try to garnish your wages. This means they would take a portion of your paycheck to go toward your debt. Filing for chapter 7 bankruptcy can stop wage garnishments by providing you with legal protection from your creditors.
- Discharging taxes. You may be able to discharge some of your taxes if you file for chapter 7 bankruptcy. This can be a massive relief for people who are struggling to pay their taxes.
- Protecting your assets. If you are worried about losing your possessions, filing for chapter 7 bankruptcy can help you protect your assets. This is because bankruptcy allows you to exempt certain assets from being sold to pay your creditors.
Who Qualifies for Chapter 7 Bankruptcy?
Only some people qualify for chapter 7 bankruptcy. There are specific parameters you must meet to be eligible for this type of bankruptcy. The most common qualifications include:
- You pass the means test. The first step in qualifying for chapter 7 bankruptcy is passing the means test. This test is used to determine if you can repay outstanding debts. If your income is below the median income for the state, you will automatically qualify for chapter 7 bankruptcy. However, if your income is above the median income, additional information will be needed to further prove qualifications for chapter 7 bankruptcy.
- You have unsecured debt. To legally file for chapter 7 bankruptcy, you must have unsecured debt. This includes credit card debt, medical bills, and personal loans. These are debts that do not have collateral, such as a car or a home, attached to them.
- You have not filed for bankruptcy in the past eight years. If you have filed for bankruptcy in the past eight years, you will not be eligible for chapter 7 bankruptcy. However, if it has been longer than eight years since you have filed for bankruptcy, you are no longer considered a bankruptcy risk and may once again be eligible.
How Do You Officially File for Chapter 7 Bankruptcy?
Understanding the flow of a chapter 7 bankruptcy application process can help reduce some of the stress associated with filing for it. Here are the steps you will need to take:
- Attend a mandatory credit counseling session. Before officially filing for chapter 7 bankruptcy, you must attend a mandatory credit counseling session. This can be done online, over the phone, or in person. You will need to provide legal proof that you have completed this counseling session before you can file for bankruptcy. If you decide to apply 180 days or more after your last credit counseling session, you will need to retake the course.
- Hire a bankruptcy attorney. While it is not required that you hire a bankruptcy attorney, it is highly recommended. Bankruptcy law is complex and can be confusing. It leaves the average layperson with many unanswered questions and disconnected from the process. A bankruptcy attorney can combat this by preparing all of the necessary paperwork, appearing in court with you, and representing your best interests throughout the bankruptcy process.
- Complete the bankruptcy paperwork. The next step is to complete the bankruptcy paperwork. This includes the bankruptcy petition, schedules, and statements. The bankruptcy petition is where you will list all of your assets and liabilities. The schedules are used to list your creditors and the debts you owe them. The statements provide additional information about your finances.
- File the bankruptcy paperwork. Once you have completed the bankruptcy paperwork, you will need to submit it to the court. There is a required filing fee, which is typically around $300. This will make your bankruptcy official and mark the start of the bankruptcy process.
- Allow the trustee to take over. Once your bankruptcy is official, a trustee will be assigned to your case. The trustee’s job is to oversee your bankruptcy and ensure everything is going according to plan. The trustee will also be responsible for liquidating your assets and distributing the proceeds to your creditors.
- Attend the 341 meeting. This meeting is also known as the creditors’ meeting. This is a meeting between you, your trustee, and your creditors. During this meeting, your creditors will have the opportunity to ask you questions about your bankruptcy forms, finances, and other relevant information. This is also an advantageous time for you to ask any questions you may have about the bankruptcy process.
After the 341 meeting, your trustee will determine whether you are eligible for chapter 7 bankruptcy. If you are found to be ineligible, your case will be dismissed, and you will be prevented from filing for chapter 7 bankruptcy. However, if you are found to be eligible, your case will proceed one step closer to getting your debt discharged.
How Can a Bankruptcy Attorney Help Me?
The level of support and expert insight that a bankruptcy attorney can provide throughout the chapter 7 bankruptcy process is immeasurable. Here are some of the ways a bankruptcy attorney can help you:
- Prepare the bankruptcy paperwork. The bankruptcy process requires a lot of paperwork, such as the bankruptcy petition, schedules, and statements. A bankruptcy attorney can help you prepare all of the necessary paperwork to meet mandatory deadlines and avoid missing any filing fees.
- Represent you in court. A bankruptcy attorney can represent you in court and ensure your interests are protected. They can look for any mistakes that could be made during the bankruptcy process and work to correct them.
- Negotiate with creditors. A bankruptcy attorney can also negotiate with your creditors on your behalf. This includes working out payment plans, settlement agreements, and other arrangements that can help you get out of debt.
- Protect your assets. One of the main goals of bankruptcy is to protect your assets and discharge your debts. A bankruptcy attorney can help you do both things by properly navigating the bankruptcy process.
Contact Coggins Law Today
If you are considering filing for chapter 7 bankruptcy, it is important to have an experienced bankruptcy attorney on your side. Coggins Law has helped countless individuals and businesses through the bankruptcy process. Contact us today to schedule a consultation. We will review your financial situation and help you determine if chapter 7 bankruptcy is right for you.