What is the Process of Filing Chapter 7 Bankruptcy Cases?

The recent financial meltdown has left many people in a financial mess. Job cuts and pay cuts have further complicated situations for many people. In such a situation you might be consider filing bankruptcy to get rid of your woes. However filing bankruptcy is the last ditch effort for anyone looking to get out of a financial mess. Before you opt for this you should try out all other repayment options. In the United States there are different chapters under which one can file bankruptcy. Among these chapters, Chapter 7 which is also known as the ‘straight bankruptcy’ is the most preferred one. Here in this short write-up we shall take a look at the basic procedure of filing Chapter 7 bankruptcy cases.

• To start with you need to hire the services of a professional attorney who specializes in bankruptcy related cases. You can do some research on the Internet or ask for reference from your friends and colleagues. The attorney will guide you through the different stages of filing apart from trying to work out the case in your favor.
• Along with your attorney you will need to analyze some debts, such as child support obligations as these are not dischargeable in Chapter 7 bankruptcy. If you pledged collateral for a debt your creditor can take the property if the debt isn't paid.
• Know if you qualify for Chapter 7 bankruptcy. You will have to take the ‘Means Test’ that is based on your income and family size in relation to the mean income of the state you reside in. The mean income is revised on a regular basis and your attorney will guide you on that. In case you fail the Means Test you shall have to choose Chapter 13.
• If you qualify for Chapter 7 bankruptcy filing you will need to undergo Credit Counseling. You must get credit counseling from a government-approved organization. This has to be done within 180 days before you file. This is very important as without debtor education course your case is likely to be dismissed before you obtain a discharge.

• Along with the bankruptcy petition you will also need to file a schedule of assets and liabilities, current income and expenditures. All kinds of debts need to be included here. Keep in mind that the petition and other documents need to be filed in the State where you live or where you own a business or have most of your assets depending on your case.
• Once the petition has been filed the court grants you an automatic stay and this prevents your creditors from filing lawsuits, garnish wages or contact you demanding their dues. This temporarily relieves you from your creditors.

Filing for bankruptcy under Chapter 7 can affect your credit score adversely and your attorney will explain to you these in details. Do not compromise on the choice of attorney as this will ensure you get maximum relief in terms of repayment and right to your assets while filing for bankruptcy.

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How To Go About Handling Chapter 7 Bankruptcy Cases In California?

Chapter 7 bankruptcy is a procedure that allows you to eliminate your unsecured debts and make a fresh beginning. This bankruptcy procedure is so named as under the United States Code (Bankruptcy Code) Chapter 7 of the Title 11 lists down the procedure of filing for liquidation. The Chapter 7 bankruptcy is also called straight or liquidation bankruptcy.

If you are a person with zero assets, the Chapter 7 bankruptcy is for you as you get to do away with unsecured debts such as credit cards, most of the personal loans, medical bills etc. Another advantage of filing for Chapter 7 bankruptcy is that you are normally allowed to retain your property, your car and most of your personal belongings.

Who is Eligible to File For Chapter 7 Bankruptcy?

All individuals can file for Chapter 7 bankruptcy. However, to be eligible for this section, you will have to pass the Means Test, a clause added to the bankruptcy code in 2005. The means test checks your income and expenses and accordingly allows you to file under this chapter. However, if you already have a bankruptcy discharge under your name in the last six to eight years, you are not allowed to file under Chapter 7. Moreover if after checking your income, expenses and debt burden it is found that you fulfill the criteria for Chapter 13, you cannot use Chapter 7.

How to Handle Chapter 7 Bankruptcy Cases in California

Once you are allowed to file for Chapter 7 bankruptcy, you will have to file for a petition in the bankruptcy courts of California and fill out a number of forms. These forms will ask you several things such as-details of the property you own, your current income and expenses, the details about the debts etc.

Since there are several things to be filed it is best you hire a bankruptcy attorney based in California. The lawyer will be able to guide you through the legal procedure from the first step to the end. While the whole procedure can take about four to six months, it will cost you approximately $299. Moreover you will need to visit the court just once.

Once you apply for exemption under Chapter 7 bankruptcy, you are literally handing over all your property and assets to the courts. While your case is in the court, you cannot sell or give away your property or pay-off your other debt without getting the court's approval.

The court appoints a bankruptcy trustee whose job is to look over your case. The trustee checks that your creditors are paid at the best of your ability. The more the trustee recovers from the creditors on your behalf, the more the trustee is to be paid. There are certain debts that are exempted under Chapter 7 bankruptcy in California. Debts on child support, tax, students' loan are automatically exempted unless the court directs otherwise.

Chapter 7 should be ideally used if you want to get rid of your unsecured debts and want to retain your property and other assets.

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