Chapter 7 Bankruptcy Attorney Referral Service
What is Chapter 7 Bankruptcy?
A Chapter 7 Bankruptcy allows for many or all of your debts to be cancelled. However, it also means that some of your property might be sold or liquidated to pay any creditors you may have. This type of bankruptcy is designed to give you a “fresh start.”
Specific criteria needs to be met to qualify for a Chapter 7 Bankruptcy. For instance, under a means test, you must have income low enough to file for this type bankruptcy. The means test ensures that those filing for a Chapter 7 Bankruptcy truly cannot pay their debts.
To meet the means test, it must first be determined whether your income is more or less than the median income in California. If you earn more than this, you must determine whether enough income will be left over, after subtracting some expenses, to repay some of your debt. This is also known as ‘monthly disposable income’. The higher this disposable income, the less likely you will be allowed to file for a Chapter 7. The means test applies only to those who have primarily consumer debts.
There are other criteria for Chapter 7 Bankruptcy, including:
- Not receiving a bankruptcy discharge in the last 6 – 8 years
- Being eligible for a Chapter 13 Bankruptcy based on income, expenses, and debt burden
To file for a Chapter 7, you must fill out a petition along with a number of other forms that will be filed with your local bankruptcy court. The forms will ask about your property, current income and living expenses, debts, property you are allowed to keep under the law (exempt property), property owned and money spent during the last two years, and property sold or given away in the past two years.
When you file for a Chapter 7, an “Order for Relief” is automatically put into effect. This is also known as an automatic stay. The automatic stay means that most creditors will be stopped from trying to collect what you may owe them.
For example, creditors will be unable to:
- Garnish wages
- Empty your bank accounts
- Repossess your car
- Foreclose on your house
- Take other property you own
- Cut off utility services
- Take away welfare benefits
See also: Foreclosure Alternatives
Why would I need an attorney when filing a Chapter 7 Bankruptcy?
Filing for Chapter 7 Bankruptcy is a complicated process because so much information is needed for the forms that must be filed.
Additionally, after filing for Chapter 7 Bankruptcy, you might be required to meet with creditors who will ask you questions. A bankruptcy attorney can prepare you for the creditors’ meeting and give you an idea of what may be asked.
Creditors may also challenge whether your debt can be discharged, allege that you committed fraud, or allege some other type of illegal action. An attorney will be able to assist with disputes between you and your creditors, and will help you form defenses against any allegations of misconduct.
A professional bankruptcy attorney is also experienced in helping clients file for different types of bankruptcy and will be able to explain your options, the process involved in each, and what the consequences of each are.
What type of attorney would I need for a Chapter 7 Bankruptcy?
If you are filing for any type of bankruptcy, a bankruptcy attorney is essential. An attorney who has experience in this specific area of law will know the complexities involved. If you are specifically filing for Chapter 7 Bankruptcy, securing legal counsel with experience in this field is imperative.
Let us know if you’re an attorney interested in becoming a member of the SFVBA’s Attorney Referral Service.
See also: Chapter 11 Bankruptcy.