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Chapter 7 bankruptcy

Dealing with insurmountable debt or constant calls from collection agencies can be an extremely stressful situation.  Outstanding debt may also lead to the filing of lawsuits.  While the thought of filing Chapter 7 is typically thought of as a last resort and carries a negative reputation, it is more common than you might expect.  Chapter 7 Bankruptcy provides an option to eliminate most debts, such as credit cards, medical bills, payday loans, certain judgments, and even some outstanding taxes.  In the typical Chapter 7 case, you obtain a "fresh start" from your debt while being able to retain your assets including your house, cars, and personal property.  Chapter 7 is a quick bankruptcy option, which typically takes three to four months to complete.

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In order to qualify for a Chapter 7 Bankruptcy, you must pass the "Means Test."  This test compares your monthly income to the median family income in your state.  The test is used to examine your financial hardship and ability to pay back your debts.  If you are interested in determining your eligibility for a Chapter 7, we will run a Means Test as part of your free initial consultation.  In the event you do not qualify for a Chapter 7 Bankruptcy, you may still file for Chapter 13.

Once your case is filed, a Trustee will be assigned to the case to administer the bankruptcy estate in order to pay back your creditors.  In most cases, your personal property, such as your house, car, and personal belongings, will be considered exempt assets and will not be sold by the Trustee.  Most typical Chapter 7 cases are considered "No Asset" cases, which means none of your assets are used to pay back creditors. 

About 30 days after the case is filed, you will have to attend a "Meeting of Creditors."  In most cases, creditors rarely attend the meeting.  It will take place in front of the Trustee assigned to your case and your attorney will be at the meeting with you.  During the meeting, which generally lasts around 5-10 minutes, the Trustee will ask you basic questions about your assets, make sure you understand your options under the Bankruptcy Code, and ask for a brief explanation on what caused you to file the case.  The Meeting of Creditors is generally the only meeting you will need to attend during your Bankruptcy Case.  

The typical Chapter 7 case is closed around 60 days after the Meeting of Creditors.  After the case is completed, your debts will be discharged and you will no longer be personally liable.  Certain debts, such as student loans, most taxes, and domestic support obligations are not dischargeable through the Chapter 7.

If you have more questions about your exemptions or to see if you qualify for Chapter 7, contact our attorneys today for a free initial consultation.



Updated on 4/13/2018