Chapter 7 Faq
Think of your case in two major respects: assets and debts. The whole idea in Chapter 7 is attempt to protect as many or all of your assets through exemptions. The second part is trying to discharge and get rid of as many of debts as possible.
Chapter 7 in a nutshell if few major steps:
- Gather all documents and information necessary to file
- Sign and file your case
- Attend the 341 meeting of creditors
- Wait 60 days from your 341 meeting of creditors to get your discharge
There is much, much more to the process. But this is a general outline of how you will proceed toward a discharge.
- There is no minimum or maximum debt limit. A Debtor is barred from Chapter 13 bankruptcy if his or her debt exceeds $1,184,200 in secured debt and/or $394,725 in unsecured debt. Unlike Chapter 13 bankruptcy, Chapter 7 bankruptcy permits you to file for and have discharged any amount of debt. Note that not all debts are dischargeable (See section below: What debts are not discharged in a Chapter 7 bankruptcy?).
- Any unpaid balances that remain after your non-exempt assets have been distributed are discharged.
- You keep any wages you earn or property you acquire, except for inheritances (received within 6 months), after the bankruptcy filing date.
- Most cases are discharged and over in about 3 months.
- Your non-exempt property may be collected and sold by the Trustee.
- It only temporarily stops foreclosure.
- Anyone who cosigns a loan for you may be liable for the debt unless they file for bankruptcy protection.
- You can only file once every eight years.
- You cannot strip an unsecured second lien on your residence.
- You cannot make up arrearages (missed payments) on your home or vehicle.
- You cannot cram down (reduce to fair market value) on your car or reduce the interest rate.
These are only some of the disadvantages of Chapter 7 bankruptcy. Please call us to discuss your particular circumstances.
To qualify for relief under Chapter 7 bankruptcy of the Bankruptcy Code, the following applies:
- The debtor may be an individual, a partnership, or a corporation or other business entity.
- Subject to the Means Test, relief is available under Chapter 7 bankruptcy irrespective of the amount of the debts or whether the you are solvent or insolvent.
- An individual cannot file under Chapter 7 bankruptcy or any other chapter, if during the preceding 180 days a prior bankruptcy petition was dismissed due to the debtor’s willful failure to appear before the court or comply with orders of the court, or the debtor voluntarily dismissed the previous case after creditors sought relief from the bankruptcy court to recover property upon which they hold liens.
- Must complete credit counseling and obtain a certificate.
- The debtor may not have received a discharge in a Chapter 7 bankruptcy in the previous eight years, or Chapter 13 bankruptcy in the previous four years.
We will normally do the following things in a Chapter 7 consumer case:
- Analyze the amount and character of the debts owed by you to determine whether bankruptcy is the best remedy for your financial problems.
- Assist with pre-bankruptcy planning, so that a minimum amount of property will later have to be turned over to the trustee, if any.
- Advise you in determining exempt and non-exempt property and debts that are dischargeable.
- Review your history of payments and transfers to determine possible exposure to recovery by the trustee or other creditors.
- Assemble the information and data necessary to prepare the bankruptcy schedules and statements for filing.
- Prepare the proper petition, schedules, and statements for filing with the bankruptcy court.
- Determine whether the education classes are necessary. If so, file the required certificates with the court.
- File the bankruptcy petitions, schedules, and statements with the court and obtaining the necessary injunctions and restraining orders.
- Attend the meeting of creditors with the Debtor.
- Preparing and filing amended schedules as required by the court.
- Address issues related to redemption, surrender or reaffirmation.
- Respond to inquiries from your creditors and/or the Bankruptcy Trustee.
We’ll discuss this in detail with you at your consultation.
Attorneys’ fees are charged in addition to the fees required by the court (currently $335). We’re not trying to be coy, but it is impossible to quote an exact fee without first reviewing your individual situation – quotes range dramatically. Each case is too unique to give a generic quote. Please call your San Francisco bankruptcy attorney at (415) 963-4004 to schedule a consultation.
It important to know that most Chapter 7 bankruptcies are what’s called a “no-asset” case meaning you keep all assets. “No-asset” means that you have no money or property of a value in excess of the exemptions allowed by law, In general, the trustee will file a “no asset” report shortly after the meeting of creditors. Soon after the meeting of creditors the trustee/court will decide whether or not your case is a no-asset case. Normally, your discharge will be entered approximately 90 days after your case was originally filed, unless a creditor or trustee files an objection to your discharge.
If your case involves non-exempt assets, the bankruptcy Trustee will determine if the assets are something she can make a profit from and pay herself and your unsecured creditors a dividend. You are obligated to protect those assets until the Trustee can make arrangements to pick them up. A notice will be sent out to all the creditors notifying them of a possible distribution. The creditors will then file a “proof of claim” to try to get paid. The Trustee will examine the proof of claims and object to those the Trustee deems to be improper. All claims not objected to by the Trustee, you, or another creditor will be approved by the court and the creditors will receive a pro-rata share of whatever the Trustee has collected. The fees for the auctioneer, trustee and her attorney are paid out of the funds they collected, not by the Debtor. Oftentimes, it is possible to work out a buy-back arrangement with the trustee where you make payment(s) to the Trustee in exchange for keeping your property.
Is there a way that I can minimize the amount of non-exempt assets that I will have to turn over to the bankruptcy trustee?
It depends on what assets you have and the timing. Some pre-bankruptcy planning is almost always part of the process. We consider some things such as whether you can place money into an IRA before filing makes sense, or timing the filing so that you have lower balances in your bank accounts on the date of filing. There are many considerations that go into this process.
Please review the Do’s and Dont’s of Bankruptcy for more information. You should always consult with a bankruptcy attorney in exemption planning.
If your discharge in bankruptcy is granted, many of your debts will be discharged. The following list is intended to be only an outline of most debts that are not discharged. Some of these debts are automatically not dischargeable, some require the creditor to timely file an adversary proceeding to make such a determination. In other words, if the creditor fails to take action, sometimes you can get rid of a debt that otherwise you would be stuck paying.
One noticeable distinction between Chapter 7 and Chapter 13, is that in a Chapter 7 you cannot discharge certain debts arising from divorce and marital settlement agreements that you can discharge in Chapter 13 (note that child support and alimony is not dischargeable under either chapter). But other commonly nondischargeable debts include:
- Taxes due within the last three years or taxes not assessed because of fraud.
- Fraudulent tax returns.
- Debts for obtaining money, property, services, or an extension, renewal, or refinancing of credit by means of false pretenses, fraud, or a false financial statement used with intent to deceive.
- Debts not listed on your bankruptcy papers, unless the creditor had knowledge of the case in time to file a claim.
- Fraud, embezzlement or larceny.
- Intentional injury.
- Debts for student loans, unless not discharging the debt would impose a severe undue hardship. This undue hardship must be properly pled to the Court and the judge will decide based on your unique situation. This is a very difficult burden for the debtor to prove.
- Debts that were or could have been listed in a prior bankruptcy case in which you either waived your discharge or your discharge was denied.
- Debt for personal injury judgments against you resulting from car accidents in which you were a drunk driver.
- Monies owed to a retirement, pension, profit-sharing, stock bonus or such other plan.
Unless you owe your employer something, there is no reason they must be notified.
Unfortunately, we are not privy to the formulas used by credit reporting agencies. In all candor, the filing of a bankruptcy may mean your credit rating will decrease, and will remain on your credit report for up to ten years. Depending on your situation, it may not take long after your discharge to substantially raise that rating. Several financial institutions openly solicit business from recent debtors, apparently because they know that if you just filed a Chapter 7, you cannot file another Chapter 7 for at least eight years. In general, most people faced with bankruptcy already have a poor credit report score so filing for bankruptcy can be one way to start rebuilding credit.
In short, yes. However, navigating the bankruptcy code is extremely difficult. Having been brought in to clean up cases where people had difficulties after filing by themselves, we cannot recommend this route. You may receive a discharge, but unnecessarily give up property that you could have preserved. Worse, you can make an innocent mistake that results in dismissal of the case or loss of discharge. We can tell you from experience that fixing cases is much more expensive and uncertain versus doing it correctly in the first place. San Francisco bankruptcy attorneys from JC Law Group PC can assist in your bankruptcy filing and protect your interests.
Yes, credit card debts are unsecured debts and are generally dischargeable in bankruptcy. It is important to contact a bankruptcy attorney immediately upon receiving the complaint because there are deadlines for responding to the complaint, and time frames in which the credit cards can get a default judgment against you. Once a default judgment is entered, they can move to garnish your wages, levy your bank accounts or place a lien on your property.
Call 415-963-4004 or complete the online consultation request to schedule an appointment with an attorney from JC Law Group PC if you need assistance.