Chapter 7 Bankruptcy

Chapter 7 – The Most Common Bankruptcy

When most people think of bankruptcy, they are usually thinking of a Chapter 7 bankruptcy. Chapter 7 is the most common form of bankruptcy in the United States.

In a Chapter 7 bankruptcy, the individual is allowed to keep certain exempt property. Most liens, however (such as real estate mortgages and security interests for car loans), survive, unless you choose to surrender the property. The amount of property that can be claimed as exempt varies from state to state. Non-exempt assets, if any, are sold by the trustee to repay creditors. Many types of unsecured debt are legally discharged by the bankruptcy proceeding.

Chapter 7 allows you to eliminate unsecured debt such as:

  • Credit cards
  • Medical bills
  • Unsecured loans
  • Personal loans
  • Older tax debt may be dischargeable
  • Debts from a vehicle repossession
  • Home equity lines of credit (HELOC), if your home was foreclosed or surrendered

What is not discharged in a Chapter 7 Bankruptcy?

There are various types of debt that are not discharged in a Chapter 7 Bankruptcy.

Common examples of non-dischargeable debt include:

  • Child support
  • Income taxes less than 3 years old and property taxes
  • Student loans (very rare exceptions)
  • Fines and restitution imposed by a court for any crimes committed by the debtor
  • Spousal support
  • Property settlements through divorce

Despite their potential non-dischargeability, all debts must be listed on bankruptcy schedules.

A Chapter 7 bankruptcy remains on an individual’s credit report for 10 years from the date of filing. This can make credit less available and terms less favorable, although high debt or delinquent debt can have the same effect. Future ability to obtain credit is dependent on multiple factors.

 

BENEFITS OF CHAPTER 7 BANKRUPTCY

Chapter 7 bankruptcy is a good option for debtors who need a fresh start financially. Chapter 7 will stop wage garnishments, bank levies, and lawsuits filed by creditors. Many assets, such as bank accounts, vehicles, equity in your home, and jewelry are protected under Chapter 7 bankruptcy. Once your Chapter 7 bankruptcy is completed you can begin rebuilding your credit. If you do nothing, your credit rating will continue showing late payments and balances owed.

FILING FOR CHAPTER 7 BANKRUPTCY

Filing for Chapter 7 bankruptcy is often the quickest way out of debt and the quickest way to rebuild credit. Once we have met with you and discussed your options, we will prepare the paperwork for filing, complete the Means Test and determine the best time to file.

You will need to be prepared to provide the following documents in order for us to prepare your case:

  • A copy of your most recent filed tax return
  • If you are working, copies of your paystubs for the last 6 months
  • Copy of your valid picture ID (driver’s license)
  • Copy of your SS card or other form of SS number verification
  • Also, you will be required to take a credit counseling course (online or by telephone) before your case is filed and a Financial Management course after your case is filed. Our office provides clients with the information to complete these courses at the appropriate times.

Once your Chapter 7 bankruptcy is filed, the court immediately issues an order called an “automatic stay.” At that time, your creditors are prevented from taking any further steps to collect the debt. This bankruptcy order is often the relief most people need just to start putting their finances back in order.

Approximately 30 days after filing your case, you are required to attend a creditor meeting with your attorney. There is no judge present, but a trustee is assigned to your case and verifies the information in your bankruptcy petition. At the end of your case, you will receive an Order of Discharge issued by a Federal Bankruptcy Court. This court order prevents creditors from taking any further action to enforce collections against you.

Free Chapter 7 Bankruptcy Evaluation

Learn more about the protection Chapter 7 bankruptcy offers. At the Law Office of Hindley & Henderson, we have been helping clients understand the bankruptcy process for over 30 years. We work with you closely to explain your options and will help guide you through the entire bankruptcy process as smoothly as possible. Our staff is friendly, informative, and available to assist you on the phone, via email, or in person. You will receive prompt, personal service and we strive to help all our clients feel less stress about their financial situation.

Many law offices do not have the support staff to answer the phone and emails quickly, but we have staff available Monday through Friday from 9 a.m. to 5 p.m. to assist you. We also have evening and weekend appointments and offer reasonable rates and payment plans.

Hindley & Henderson Bankruptcy Law represents clients throughout the North Bay, SF Bay Area and Silicon Valley. We have a bankruptcy law office in Santa Rosa to serve Sonoma, Marin and Napa Counties, and a bankruptcy law office in San Francisco to serve the SF Bay Area.  We also can provide services for the San Jose, San Mateo and Silicon Valley.

Contact Us today to get the fresh start you deserve.