Chapter 7 Bankruptcy

Chapter 7 bankruptcy may be referred to as a "liquidation" bankruptcy. Unlike Chapter 13, which provides a means for you to restructure your debts and pay them off, a Chapter 7 bankruptcy discharges eligible debts, leaving you free of those financial obligations entirely. However, in order to discharge those debts, you must turn over all non-exempt property to the court-appointed trustee in order to have the property sold and the proceeds distributed to creditors. In the state of California, there are two sets of exemption guides which can be applied to items such as your house, car, or other valuable possessions. If the value of your property is covered by your exemptions, then you will be allowed to keep it, and there will be no disbursement to creditors. These types of cases are called "no-asset" cases, and comprise the majority of Chapter 7 filings.

Under the new bankruptcy laws put into place in recent years, not everyone qualifies for Chapter 7 bankruptcy. You must meet specific guidelines with regards to income and your ability to repay unsecured debt in order to qualify. In addition, all individuals and couples who file for Chapter 7 bankruptcy must attend a court-approved financial counseling/debt management class, and receive a certificate of completion within the 180 days preceding the bankruptcy petition. While you may develop a repayment plan while in the class, you are not required to file this with the court, as you are not required to repay debts which are discharged under a Chapter 7 bankruptcy.

If you have certain secured assets that you wish to keep, such as a car, or some other piece of property, and you know that you will be able to make the payments on it, you will be given a chance to "reaffirm" the debt as a part of the bankruptcy process. By reaffirming the debt, you will still be liable for payment, even after your other debts have been discharged. Therefore, you should only reaffirm debt that you are absolutely sure you will be able to afford.

If you are considering filing for Chapter 7 bankruptcy, but you're confused by the new laws and regulations in place, you are not alone. Now more than ever, it's important to have the advice and representation of a solid, knowledgeableOrange County Bankruptcy Attorney. Our firm has helped individuals throughout Orange County understand how the benefits of Chapter 7 bankruptcy can help them to overcome their financial difficulties, and we can help you as well. Contact us today and schedule a free initial case evaluation. The sooner you get started with your Chapter 7 bankruptcy filing, the sooner you will be able to enjoy peace of mind and get back on your feet with a fresh financial start.