Chapter 7 bankruptcy process is one of the most common forms of bankruptcy protection available to individuals in California who are struggling with overwhelming debt. This legal process allows qualified individuals to eliminate most of their unsecured debts and get a fresh financial start. If you are considering filing for Chapter 7 bankruptcy, it’s important to understand how the process works, who qualifies, and what debts can and cannot be discharged.
Not everyone is eligible for Chapter 7 bankruptcy. To qualify, you must pass a “means test,” which is designed to determine whether your income is low enough to file under Chapter 7. The means test compares your average monthly income over the past six months to the median income for a household of your size in California. If your income is below the median, you typically qualify. If it is above, you may still qualify after certain expenses are deducted, but the process is more complex.
Most individuals who file for Chapter 7 bankruptcy do not have significant assets. This is because Chapter 7 is often best suited for people who have little property and a large amount of unsecured debt, such as credit card balances or medical bills. If you own a home or other valuable assets, you may want to explore Chapter 13 bankruptcy as an alternative.
The Chapter 7 bankruptcy process begins when you file a petition with the bankruptcy court. This petition includes detailed information about your income, expenses, assets, and debts. Once your case is filed, an automatic stay goes into effect, which immediately stops most collection actions, including harassing phone calls, wage garnishments, and foreclosure proceedings.
A bankruptcy trustee will be appointed to review your case. The trustee’s job is to evaluate your assets and determine if any non-exempt property can be sold to pay your creditors. In most Chapter 7 cases, filers are able to keep most or all of their property because California law provides exemptions for certain assets, such as a portion of the equity in your home, your car, and personal belongings.
One of the main benefits of Chapter 7 bankruptcy is the ability to discharge, or eliminate, most unsecured debts. Common types of debt that can be wiped out include:
However, not all debts can be discharged. The law excludes certain obligations from being eliminated through bankruptcy, except in very rare circumstances. These non-dischargeable debts include:
If you have questions about which of your debts can be discharged, it’s important to consult with an experienced bankruptcy attorney.
Once you file for Chapter 7 bankruptcy, you will need to attend a meeting of creditors, also known as a 341 meeting. During this meeting, the trustee and any creditors who choose to attend can ask you questions about your finances and the information in your bankruptcy petition. Most cases are straightforward, and the meeting is brief.
If you are eligible and complete all required steps, your debts will be discharged after any non-exempt assets are used to repay creditors. The entire process typically takes three to six months. At the end, you will be free from most of your unsecured debts and can begin rebuilding your financial life.
Navigating the bankruptcy process can be complex and stressful. The Law Office of Stewart Lim is dedicated to helping clients in California achieve debt relief through Chapter 7 bankruptcy. Our team will work closely with you to list all your assets and debts, guide you through each step, and ensure your rights are protected. We can also help you understand the differences between Chapter 7 and Chapter 13 bankruptcy, so you can make the best decision for your situation.
If you are ready to stop creditor harassment and take control of your finances, Contact us today for a free consultation. Let us help you achieve a fresh start and a brighter financial future.
When you meet with our office for your free initial consultation, our experienced attorneys can advise you as to the best course of action for you to take in handling your debts. With over 10 years of experience helping the residents of Long Beach, Orange County and surrounding cities, The Law Office of Stewart Lim is here to help you. When you are being harassed by creditors, let our office take the reins and eliminate those calls and threats. Call us today to schedule an appointment.
A Chapter 7 Bankruptcy may be the right action to handle your debt. Find out by contacting The Law Office of Stewart Lim today:
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