What's Chapter 7 Bankruptcy all about?
If you're reading this, chances are you are in debt and considering options to emerge out of financial hardship so that you can start fresh. If credit counseling, negotiation and consolidation have all been explored to no avail, then bankruptcy might be right for you.
Known as a "straight bankruptcy" or liquidation, Chapter 7 Bankruptcy is the most common form of bankruptcy filing - almost 65% of all consumer bankruptcy filings are filed under Chapter 7.
Under Chapter 7 of the Bankruptcy Code, all non-exempt property is liquidated (converted into cash) and this cash is then distributed to your creditors. In many cases, debtors often have little-to-no assets that can be liquidated, so the "fresh start" that you're seeking can come even quicker than you necessarily thought possible.
For a review of debt relief alternatives to bankruptcy in California and to get a free debt relief analysis along with a savings estimate, simply answer a few questions online to qualify.
How does Chapter 7 work?
When you file for bankruptcy, you will be appointed a trustee who collects all your non-exempt property, sells these assets and then distributes the funds to your creditors. And unlike with other types of bankruptcy filings, generally you do not need to pay your trustee to manage your filing.
While it is possible that in some cases you would lose all your assets, this doesn't have to be the case. That's why it is SO important that before you decide to file, you first speak with a reputable Bankruptcy Attorney. Your attorney will be able to advise you of what to expect and the best courses of action to take so as to allow you to keep more of what's yours.
Furthermore, one of the advantages of filing for Chapter 7 Bankruptcy is that it allows you sign a Reaffirmation Agreement. This agreement allows a debtor to continue paying off a car loan or mortgage, in which case he would not lose these two valuable assets to the bankruptcy process.
The whole point of filing for bankruptcy is so that you can get OUT of bankruptcy and get on with regaining your financial freedom. Chapter 7 discharges are subject to a lot of criteria, so it's very important that you seek legal counsel before filing to make sure you understand the scope and details of the discharge. The good news is that excluding cases that are dismissed or converted to other chapters under the Bankruptcy Code, more that 99% of Chapter 7 Bankruptcy cases are successfully discharged. So you can take heart knowing that even though you're filing for bankruptcy, there is a very real chance you will emerge clean on the other side.
To review debt relief alternatives to bankruptcy in California and to get a free debt relief analysis, along with a free savings estimate, simply answer a few online questions. It's free and there's no obligation.
Am I eligible to file for Chapter 7?
In almost all instances, yes, you can file for Chapter 7 Bankruptcy - the Means Test will determine if your situation qualifies you for a bankruptcy filing. But a more appropriate question to ask is if Chapter 7 is really the right choice for you. Debtors who own a business are not likely to embrace the possibilities of liquidation and so Chapter 11, which is based on debt restructuring, is generally more appealing. Likewise, individuals with steady income would be better suited to a Chapter 13 filing, which is also focused on restructuring, but from an individual debtor's point-of-view.
It's also important to note that if you have already been discharged from a Chapter 7 filing (or if you have fulfilled a Chapter 13 plan) in the past eight years, you're not eligible to file another Chapter 7 bankruptcy plan.
Finally, filing for bankruptcy should truly only be considered after you've exhausted all other options, as it will remain on your credit report for 10 years. During this time, you may find it difficult to secure new lines of credit, so be sure you understand all the potential drawbacks before you go ahead and file the paperwork.
Okay, I'm eligible and I want to file. Now what?
Like we said earlier, the first and most important step in filing for bankruptcy is speaking with an attorney. Filing for bankruptcy is all about following a very specific plan from start to finish, and your attorneys will need to help you each step of the way to make sure you understand what is expected of you, how to fill out the appropriate bankruptcy forms and what the next steps are.
Prior to filing for bankruptcy, it's recommended that you explore all other debt relief options as well. One course of action you may want to take is to get a free debt relief analysis and savings estimate - at no obligation.