Chapter 7 bankruptcy is a valuable tool for individuals who are in debt. This legal process helps debtors get relief from debts they cannot pay within a reasonable time. It will have serious effects on your financial life both positive and negative. Before you decide to file Chapter 7, you should know as much about the process as possible.
Here at Dolen, Tucker, Tierney & Abraham, we want you to be fully informed before you make a legal decision. This is why we have gathered many of the most common Chapter 7 bankruptcy questions to help keep you informed.
When you file Chapter 7 bankruptcy, the court orders an automatic temporary stay. This stay prevents creditors from calling you, evicting you, repossessing property, foreclosing on your home, turning off your utilities, garnishing your wages or collecting payment. The court appoints a trustee to oversee your bankruptcy. A meeting with the trustee is required. After you meet with the trustee, the court will determine which debts to discharge.
As stated on our Chapter 7 bankruptcy page, this process is available to individuals and businesses who need relief from overwhelming debts.
Considerations for filing for Chapter 7:
From filing to discharge, a Chapter 7 bankruptcy case can take up to four to six months. However, some complex cases can take longer. A bankruptcy attorney will help you estimate if your case could take longer than normal.
How long a bankruptcy filing remains on your credit report depends on which type of bankruptcy you file. For Chapter 7 bankruptcy, the filing will stay on your report for 10 years. This is due to Chapter 7 discharging debt without repayment. A Chapter 13 will be removed from your credit report after 7 years. In either chapter, the impact on your credit will decrease as time passes. Your credit will become more dependent on your financial management after filing.
There are several expenses tied to filing for Chapter 7 bankruptcy. These expenses can include:
An experienced bankruptcy lawyer helps filers avoid mistakes that could result in unnecessary loss of property or dismissal of their case.
Currently, there are no limits on how many times you can file for bankruptcy. But there are limits on the time between filings. If the court previously discharged your debts through Chapter 7 bankruptcy, then you must wait 8 years before filing again. If you used Chapter 13 bankruptcy to discharge your debts, then you cannot file for Chapter 7 for four years. If the court dismissed a previous bankruptcy filing, you cannot file another bankruptcy case for 180 days.
Filing for bankruptcy is an important decision that you should not take lightly. Before you consider filing, analyze your financial situation thoroughly. Are bill collectors harassing you? Do your creditors refuse to negotiate on your payments? This may indicate a need to consider bankruptcy. Further signs include:
Whether you are able to keep your house in a Chapter 7 bankruptcy depends on your situation. Meeting the following criteria will help you keep your home in Chapter 7 bankruptcy:
Having too much equity in your home may convince the trustee to sell it to pay your creditors. If you are behind in mortgage payments, or you have too much non-exempt equity, you still have options. Consider filing Chapter 13 bankruptcy instead. Speaking to our experienced bankruptcy attorney in the Inland Empire will help you determine the right course to take.
Discharging student loan debt with bankruptcy can be very difficult. Most debtors will not be able to get such debts (especial federal student loans) discharged. However, if repaying your student loans would cause you and your family undue hardship, you may be able to get the debt discharged. This process involves filing a separate action known as an "adversary proceeding." In this action, you would need to prove:
The U.S. Department of Education has even more resources to help with your student debt. Consult an experienced bankruptcy attorney if you feel that filing an adversary proceeding may be right for you. The law excepting student loans from discharge is currently under scrutiny and could be changed in the not-so-distant future.
As you can see, filing Chapter 7 bankruptcy is a complicated task. Hundreds of our clients got immediate peace of mind as we helped them smoothly navigate through the process. Don’t let the complications keep you from getting back on track financially. M. Wayne Tucker has over 30 years of experience practicing law. He focuses on bankruptcy cases that help individuals, families and small businesses get relief from debt and a fresh financial future.
To learn more about the bankruptcy process, and how Dolen, Tucker, Tierney & Abraham can help, call us at (909) 326-2769. Our no-charge consultation will help you determine if bankruptcy is right for you.
