Because the Chapter 7 trustee can sell the non-exempt property for the benefit of unsecured creditors, bankruptcies filed under this chapter are also referred to as liquidation bankruptcy cases. For this reason, many people are nervous about discussing a Chapter 7 filing because they are afraid of losing property. However, most of the Chapter 7 cases filed in the United States are no asset cases. In a no-asset Chapter 7 case, the debtor keeps all property while getting rid of debts.
Schedule a free bankruptcy consultation with a Chapter 7 bankruptcy attorney. You can learn more about the benefits of filing Chapter 7 and if you qualify to file under Chapter 7 during your no-cost, no-obligation consultation. Do not wait any longer to get out of debt. You can stop telephone calls from creditors and stop collection letters by filing a Chapter 7 case.
When Congress changed the Bankruptcy Code in 2005, lawmakers added a Means Test for individuals filing for bankruptcy relief. The Means Test compares your income to the average income of families of the same size in your area. The test is based on household income. Therefore, even if your spouse does not file for bankruptcy relief, your spouse’s income must be included in the calculations. However, your living expenses are also adjusted to include your spouse and children.
If your income is below the median income, you should qualify to file under Chapter 7. When a debtor’s income exceeds the median income, the debtor must complete the second portion of the Means Test to calculate disposable income. Disposable income is the amount of money you have remaining each month after subtracting allowable expenses. If your disposable income is low enough, you can still qualify for a discharge under Chapter 7.
Bankruptcy lawyers have extensive experience analyzing income and living expenses for the Means Test. The attorney considers every possible expense and deduction that may lower your income to qualify for a Chapter 7 discharge. Learn whether you qualify for Chapter 7 during a free consultation with a bankruptcy attorney.
In most cases, debtors receive their bankruptcy discharge, and the case is closed within four to six months from the filing date. This timeframe applies to a typical, no-asset Chapter 7 case.
Once you decide to file a Chapter 7 case, a legal team works closely with you to assist in gathering the information needed to complete your bankruptcy forms. Your attorney’s office takes care of completing all forms for your Chapter 7 case and filing those forms electronically with the court after you review and sign the forms. While the attorney is working to finish your forms, you will need to complete your Credit Counseling Course. The course is required by law, and a certificate of completion must be filed with your bankruptcy petition. Most debtors complete the course online in less than two hours for a minimal cost.
When your case is filed, the court schedules your First Meeting of Creditors (341 Hearing). The Chapter 7 trustee assigned to your case conducts the hearing, which lasts about ten minutes. The trustee asks questions about your finances and the information on your bankruptcy forms. In most cases, creditors do not appear at these hearings.:
If your case is a no-asset case, the last step is to complete your Debtor Education Course to receive your discharge. Most debtors take the second course from the same company they used to take the first bankruptcy course. The Debtor Education Course can also be completed online in about two hours for a minimal cost.
After the deadline for filing objections in your case has passed, the court issues an order closing your case and approving your discharge. If your case is an asset case, the case may remain open for a year or more, but you usually do not have anything else to do after you complete your second bankruptcy course.
If you have a mortgage or vehicle loan, you must continue making payments to the creditor to keep your house and car in a Chapter 7 case. Most debtors do not have equity above the bankruptcy exemptions. Therefore, the Chapter 7 trustee is not interested in taking the assets because there is no equity for the trustee to use to pay unsecured creditors.
However, if you cannot afford the payments on your home or vehicle, you may choose to surrender the property to the creditor in full satisfaction of the debt. If a creditor forecloses or repossesses property, the creditor can seek a deficiency judgment for any amount owed after the property is sold. In a Chapter 7 bankruptcy case, the creditor cannot pursue any legal action or attempt to collect any portion of the debt if you surrender the asset. Therefore, a Chapter 7 bankruptcy case can help you get rid of a house or a vehicle that has no equity without fear of owing more money to the creditor in addition to giving up the asset.
The goal of filing Chapter 7 is to receive a bankruptcy discharge. The discharge relieves your legal liability for repayment of a debt. In other words, your creditors cannot call you, write letters, file lawsuits, use collection agencies, or take any other actions to collect a debt that was discharged in your Chapter 7 case.
A bankruptcy discharge does not discharge a secured lien, such as a mortgage or a car loan. You must continue making those payments or surrender the asset as discussed above. In addition, your bankruptcy discharge does not discharge the debt for co-debtors. Co-debtors must file for bankruptcy relief to receive a discharge. A bankruptcy lawyer can discuss specific debts in further detail during your free consultation.
Chapter 7 can be an affordable solution to your debt problems.Schedule a time to speak with a Chapter 7 bankruptcy attorney during a free consultation and no-obligation case review.