Filing for bankruptcy could help you get a fresh financial start and a
new lease on life. Most commonly, individuals either find themselves filing
for chapter 7 or 13 bankruptcy. Understanding the differences between
the two, and the requirements of filing for each, can help you determine
the best path forward in your bankruptcy case.
Our attorneys are here to help with your bankruptcy dispute whether you
file for chapter 7 or 13. To schedule a consultation with our team, contact us online
or via phone at {F:P:Sub:Phone}.
How a Chapter 7 Bankruptcy Works
Chapter 7 bankruptcies are generally reserved for individuals who are in
significant debt, and cannot feasibly repay their creditors.
As part of filing for Chapter 7 bankruptcy, you must attend a credit counseling
course. These courses are intended to help individuals avoid filing for
bankruptcy (if possible), or gain the necessary financial education to
avoid filing for bankruptcy in the future.
To qualify for a Chapter 7 bankruptcy, the individual who wishes to file
must pass a means test. If an individual's income falls under the
limit set by the means test, they can file for Chapter 7 - otherwise,
they may need to file for Chapter 13.
In California, if your total monthly income over the next 60 months will
amount to less than $7,475, you should be able to file for a Chapter 7
bankruptcy. If your income falls below $12,475, you may still be able
to file depending on the circumstances of your case, but if it exceeds
that number, you may need to file for Chapter 13 instead.
In a Chapter 7 bankruptcy, you'll work with a bankruptcy trustee. Trustees
are appointed by the United States Trustee and Department of Justice to
handle bankruptcy cases, and act as liaisons between debtors and creditors.
You will attend a creditors meeting. The Trustee will verify your debts
at the creditors meeting, and your creditors may ask questions to verify
your financial status under oath. Creditors typically decide whether they
are going to forgive a debt or pursue another path forward after the creditors meeting.
In Chapter 7 bankruptcies, an individual's property can be liquidated
or seized to repay debts. However, vital assets - such as your living
space or car - are often exempt from seizure or liquidation, although
you may need to take certain steps to retain them. Many creditors will
consider debtor assets effectively worthless and forgive debts instead
of liquidating assets, but some creditors may choose to pursue liquidation instead.
While most debts are forgiven at the end of a bankruptcy case, this is
not the case for all debts. Certain debts, such as student loans or child
support payments, cannot be erased by filing for bankruptcy.
Your bankruptcy attorney can help you understand what assets are at risk
throughout your bankruptcy case, and help you improve your financial standing
when all is said and done.
Understanding Chapter 13 Bankruptcy
Generally, when individuals fail to meet the requirements for Chapter 7
bankruptcy, typically because they make too much money to pass the means
test, they must instead file for a Chapter 13 bankruptcy.
In a Chapter 13 bankruptcy, instead of liquidating the debtor's assets
to repay creditors, the trustee and bankruptcy court, as well as the creditors,
work with the debtor to develop a repayment plan. Repayment plans can
have variable timelines, and are generally meant to create a reasonable
path towards paying off debts for the debtor. As part of these repayment
plans, creditors often choose to forgive or reduce outstanding debts.
Certain debts, such as student loans or child support payments, may remain
non-negotiable. Ideally, at the end of the repayment plan, the debtor
will have paid off all their debts. Any outstanding debts that can be
forgiven at this point will be.
Having a skilled bankruptcy attorney by your side is vital if you want
to pursue the best possible outcome in your bankruptcy case. To schedule
a consultation with our team, contact us online
or via phone at {F:P:Sub:Phone}.