Chapter 7 bankruptcy is the most common and easiest form of consumer bankruptcy proceeding. Called the “fresh start” process, it is also sometimes referred to as a straight or liquidation bankruptcy. In a Chapter 7 proceeding, a bankruptcy trustee liquidates the debtor’s nonexempt property and distributes the proceeds to creditors. The subsequent bankruptcy discharge relieves the debtor from having to repay many types of debt. If you struggle to pay your bills, and you meet the eligibility requirements, The Law Office of Ricky Stern can help you obtain financial relief through a Chapter 7 bankruptcy filing.
As soon as you file a Chapter 7 bankruptcy petition, an automatic stay prevents creditors from continuing efforts to collect debt. While the stay is temporary, it provides immediate relief from creditor harassment. The automatic stay may prevent eviction or foreclosure, stop wage garnishments, and avoid utility disconnection for at least 20 days.
Ultimately, a successful Chapter 7 petition eliminates most of your unsecured debt and provides you with an opportunity to rebuild your credit. Depending on your circumstances, Chapter 7 can prevent you from losing exempt assets like your home or motor vehicle.
Eligibility for Chapter 7 bankruptcy is based in part on complex income criteria. A debtor can qualify if the debtor’s income is lower than the state’s consensus median income or the debtor qualifies under a means test based on 60 months of disposable income.
Chapter 7 is not available if you have received a bankruptcy discharge within the last eight years. There are other eligibility limitations as well. In some cases, people who are not eligible for Chapter 7 may be able to file instead for Chapter 13 bankruptcy. The Law Office of Ricky Stern helps clients with the Chapter 13 process as well.
On successful conclusion of a Chapter 7 bankruptcy case, many debts are completely discharged, which means you no longer owe them or have to pay them back. Creditors can no longer proceed with collection, report nonpayment, or pursue you in any other way. Unsecured debts that are discharged in a Chapter 7 bankruptcy include:
While a Chapter 7 discharge includes many debts, certain types of debt are not discharged, including alimony, child support, and current taxes. Secured creditors may retain some rights to seize property securing an underlying debt even after a bankruptcy discharge. When you work with the Law Office of Ricky Stern, we explain in detail which of your debts will and will not be included in a Chapter 7 discharge before you make the decision whether to file for Chapter 7 bankruptcy.
A debtor initiates a Chapter 7 bankruptcy by filing a petition in the United States Bankruptcy Court. Accurate and detailed financial information must accompany the petition. Married individuals must gather and submit the financial details for both spouses, regardless of whether only one spouse files, or they file a joint petition or separate individual petitions.
Representation by legal counsel is not required in a Chapter 7 proceeding but is strongly recommended. Attempting to proceed without a knowledgeable attorney could jeopardize your ability to obtain a discharge.
When you file for Chapter 7, your assets and debts are controlled by the bankruptcy court, which assigns a bankruptcy trustee to oversee the process of liquidating nonexempt assets and repaying creditors with the proceeds. While the Bankruptcy Code allows debtors to keep certain exempt property, you should understand that filing a Chapter 7 petition may result in loss of property.
For secured debts where the property serves as collateral for the loan, like a home or vehicle, a creditor may ask the court to lift the automatic stay so they can repossess or foreclose on the property. However, if you are current in your payments, you may be able to keep the property and continue to make payments, unless there is sufficient equity in the property to justify sale of the property by the trustee.
The entire Chapter 7 process typically takes about three to four months if everything goes smoothly, but it can take longer in individual circumstances. On successful completion of the process, the bankruptcy court issues a discharge order that effectively eliminates many of the bankruptcy petitioner’s debts.
There are alternatives to Chapter 7 bankruptcy relief for consumers. Individuals with regular income may be able to seek an adjustment of debts in a Chapter 13 bankruptcy proceeding, which may provide an opportunity to save their home from foreclosure through a repayment plan. The Law Office of Ricky Stern assists consumers with both Chapter 7 and Chapter 13 bankruptcy. Before you decide how to proceed, we make certain that you are fully aware of the options that are available in your circumstances, so that you make a fully informed decision before moving forward.
To talk with The Law Office of Ricky Stern about consumer bankruptcy, please contact us to schedule a free, no-obligation consultation.
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