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Chapter 7

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Chapter 7 Bankruptcy Attorneys in Fresno

Liquidating Your Assets, Discharging Debts

Chapter 7 Freedom

Are you finding yourself feeling crushed under overwhelming debt and financial obligations? If your financial situation is holding you back from a reasonable repayment plan to your creditors, you may qualify to file for bankruptcy under Chapter 7. With Chapter 7 bankruptcy, a trustee will help you liquidate many of your eligible assets and in turn, have qualifying debts discharged or reduced by your creditors. While chapter 7 is not for everyone, it is a helpful and effective means of debt management for those that do qualify and are equipped with capable legal guidance.

Arnold Law Group, APC can help you understand your options when it comes to bankruptcy and determine whether Chapter 7 is the best choice for you. Call today at (559) 900-1263!

Debtors who file for Chapter 7 bankruptcy have the opportunity to eliminate their legal obligations to pay unsecured debt. Types of debt that can be eliminated in a Chapter 7 bankruptcy include but are not limited to:

  • Credit cards
  • Medical bills
  • Utility bills
  • Personal loans

What debts are not dischargeable?

Debts for property, such as houses, cars, boats, and recreational vehicles are classified as secured debts. If you have this type of debt, you can eliminate the debt but you may have to have that property liquidated. You also may be able to reaffirm the debt and keep the property. Not all debts are dischargeable, however.

Common types of debt that cannot be discharged include:

During a case evaluation, our firm can discuss the options available to you and provide you with caring and knowledgeable legal counsel. We can analyze your debts to determine how bankruptcy can help you and which chapter of bankruptcy to use.

Qualifying for a Chapter 7 Bankruptcy

To file for a Chapter 7 bankruptcy, individuals must pass a "means test." If your total monthly income over the next 60 months is $7,475 or less, then you may be eligible to file for a Chapter 7 bankruptcy. If it is $12,475 or more, then you cannot pass the means test.

If you fail to pass the means test, you may need to file for Chapter 13 bankruptcy instead of Chapter 7 bankruptcy. In a Chapter 7 bankruptcy, debtors typically liquidate their assets to repay creditors and wipe out their debts. In a Chapter 13 bankruptcy, debtors may maintain control of their property in exchange for repaying their debts using a payment plan over three to five years.

The Bankruptcy Process

To initiate your bankruptcy case, you'll have to file a number of forms with the bankruptcy court in your area. These forms include details about your finances, property you own, your current outstanding debts, your expenses, and property that you have recently sold or given away.

When you file for bankruptcy, you'll need to attend a credit counseling course intended to help individuals improve their financial literacy and spending habits. The court will also assign a bankruptcy trustee to your case. Bankruptcy trustees are part of the United States Trustee Program under the Department of Justice (DOJ) and work with bankruptcy courts, debtors, and creditors to ensure the bankruptcy process goes smoothly.

Importantly, trustees also attempt to ensure that creditors recoup as much of their debts as they can before the court clears any remaining dischargeable debts. For this reason, having legal counsel by your side who can advocate for you during your bankruptcy is crucial.

After filing for bankruptcy, the trustee will set up a meeting for you (the debtor) and your creditors called a "creditors meeting." During this meeting, debtors can testify to the court and their creditors regarding their debts.

After the meeting, the court will work with the debtor, creditors, and bankruptcy court to establish how creditors will be repaid. Generally, debtors must liquidate their property to repay creditors in Chapter 7 bankruptcies.

Certain property you own will be exempt from the bankruptcy process. For example, family heirlooms, motor vehicles the debtor needs to drive to work, necessary clothing, and other types of property are usually exempt, meaning creditors can't claim them to repay debts.

Many debtors have secured debts, such as loans that they've pledged towards property like a house. If you want to maintain that property, you need to continue paying for that debt - otherwise, the creditor could foreclose on the property or repossess it. Additionally, there are certain debts you can't clear with a Chapter 7 bankruptcy, such as outstanding child support or alimony payments and student loans.

It's worth noting that even when creditors can claim certain property to repay debts, many will choose not to do so since the property available is worthless to them.

Once the debtor has repaid creditors as much as they are able, the court will clear any remaining dischargeable debts and finalize the bankruptcy case. Certain aforementioned types of debt, such as child support or student loans, are almost never eliminated as part of Chapter 7 bankruptcy cases.

Contact Our Bankruptcy Lawyers in Fresno

At Arnold Law Group, APC, we can help you complete the means test and determine whether you will qualify to file for bankruptcy under Chapter 7. If your average monthly income during the past six months is more than the monthly median income of an average California family, you may not be eligible for Chapter 7 bankruptcy. If your income is below the average family, then you can move forward with filing under this chapter.

Filing under Chapter 7 can provide many benefits. Once your bankruptcy petition is filed with a federal bankruptcy court, creditors receive notice that you have filed and will not be able to contact you to collect payments. With this automatic stay in place, you receive many protections.

Contact our firm at once to learn more about how we can help you with this process.