Deciding to declare bankruptcy is a tough choice, but Chapter 7 might be a lifeline for those struggling with debt. It can provide a fresh start by wiping out certain debts completely. Fleysher Law brings clarity and compassion when guiding clients through the Chapter 7 bankruptcy process.
Filing bankruptcy to resolve debt problems can be a solid option for those seeking help with credit card and other debt. However, the process and rules can be tricky. During your free consultation, the attorney will review your situation, circumstances, and goals and then explain your options. Most clients who file bankruptcy obtain a discharge of their unsecured debt (i.e., credit cards, medical bills, personal loans, SBA loans) and may even be able to restructure their secured debt (i.e., mortgages and car loans).
Read below for more general information about Ch. 7 bankruptcy, then call us for your free consultation. Know your options and rights before making any major financial decisions.
When you're buried under debt without disposable income, Chapter 7 bankruptcy can be your shovel to start digging your way out. It's a legal process designed to eliminate most unsecured debts, such as credit card balances and medical expenses. This type of bankruptcy can offer you a clean slate.
However, it's crucial to know that declaring Chapter 7 bankruptcy is a serious decision with significant consequences. Your credit score will drop, and you could have to give up some of your property. But for many, it's the first step towards financial recovery and improving your credit report.
Before filing for Chapter 7 bankruptcy, you must pass certain tests and meet specific criteria. They include:
Definition and Purpose of the Means Test
The means test is used to see if your income is low enough to qualify for Chapter 7 bankruptcy. It compares your average monthly income to the median income for a household of your size in your state. If you earn too much, consider Chapter 13 bankruptcy instead.
Income and Expenses Calculations
The means test covers your monthly income from all sources. It's not just about what you earn from your job; it includes business income, rental earnings, and certain pensions. Then, it subtracts specific allowed expenses to see if you have enough left to pay off some of your debt.
Requirement for Pre-Filing Credit Counseling
Before filing for bankruptcy, you must complete credit counseling with an approved credit counseling agency. This has to be with an agency approved by the U.S. Trustee Program. Make sure you've considered all other options before you decide to go through with bankruptcy.
Approved Counseling Agencies
You must choose an approved counseling agency to ensure the counseling meets the legal requirements. These agencies have passed a strict evaluation to get on the list. You can find approved agencies through the Department of Justice's U.S. Trustee Program website.
Limitations on Filing Based on Previous Chapter 7 or Chapter 13 Bankruptcy
If you've already gotten a discharge in a previous Chapter 7 bankruptcy, you must wait eight years before doing it again. For a Chapter 13 bankruptcy, it's six years unless you paid all or most of your debts in the plan. This stops people from abusing the bankruptcy system.
The Option of Hiring an Attorney
You can navigate the bankruptcy process independently, but it's like walking through a maze blindfolded. Hiring an attorney gives you a guide who knows the twists and turns. An experienced lawyer from Fleysher Law can be your best ally in this challenging time.
Pro Se Bankruptcy Filing
Filing for bankruptcy without a lawyer is termed "pro se" filing. It's risky because you could lose rights or property if you make mistakes. Plus, the court doesn't give you special treatment just because you're not a lawyer.
The Importance of Legal Advice
Getting legal advice can mean the difference between successfully wiping out your debts and getting stuck in a worse situation. Our lawyers know the details of bankruptcy laws, and we can ensure you don't make mistakes that could cost you more than just money.
Chapter 7 can be a solid option for a variety of situations. Those who might qualify for Chapter 7 bankruptcy include:
Explanation of Chapter 7 for Individual Debtors
Chapter 7 allows individual debtors to erase many debts that could otherwise make it hard for them to reach their goals and live comfortably. It's a legal process that can give you a fresh start if you're overwhelmed by financial obligations by erasing certain types of debt. After filing, you could get most debts forgiven and start anew.
Sole Proprietors and Chapter 7
If you're a sole proprietor, declaring Chapter 7 can wipe out your personal and business debts. This is because you and your business are legally the same thing. It might close your business but also save you from a sea of debt.
Eligibility Criteria for Business Entities
Businesses, including corporations and partnerships, can file for Chapter 7 to liquidate and shut down their operations. It's a way to responsibly wind down a company that can't pay its debts. This step should be taken with careful consideration of all involved parties.
Liquidation of Business Assets
When a business files for Chapter 7, a trustee is appointed to sell off its assets. The money from the sale is used to repay unsecured creditors as much as possible. It's a final step to clear the business's debts.
Joint vs. Individual Bankruptcy for Married Couples
Married couples have the choice to file together (jointly) or separately (individually). Filing jointly means dealing with all your debts together. Filing individually might protect one spouse's assets, but there's much to consider.
Impact on Assets and Debts
If you file jointly, all your shared and individual debts and assets come into play. But even individual filing can affect your spouse. It's essential to know how filing might impact shared property and finances.
Types of Debts That Can Be Discharged
Chapter 7 can erase many debts, like credit card debt, medical bills, and personal loans. These are called dischargeable debts. It can be a huge relief to get these taken off your plate.
Debts That Are Not Dischargeable
But some debts can't be wiped out by Chapter 7. These include alimony, child support, and certain taxes and student loans. It will help if you plan to pay these even after other debts are discharged.
A. Gathering Financial Information
Documenting Income, Expenses, and Assets: First, you'll need to gather all your financial information. This includes a detailed list of your income, monthly expenses, debts, and assets. It's the groundwork for your bankruptcy case.
B. Filing the Petition
Where and How to File: You file a bankruptcy petition at your local bankruptcy court. This legal document states your intention to file for bankruptcy. It's the first official step in the process.
Filing Fees: Filing for bankruptcy isn't free. You must pay a fee unless you get a waiver because your income is meager. The fee is a small part compared to the relief you might get from your debts.
C. Automatic Stay
Protection From Creditors: An "automatic stay" will take effect once you file. This stops most creditors from hounding you for debt payments. It's like a protective wall between you and your creditors while the bankruptcy process moves forward.
D. Meeting of Creditors (341 Meeting)
Purpose and Procedure: A 341 meeting is a chance for creditors to come to you with questions about your finances and assets. You have to answer honestly under oath. It's a necessary step to make sure everyone has the correct information.
E. Discharge of Debts
The Role of the Bankruptcy Trustee: A bankruptcy trustee handles your case. They oversee asset sales and distribute the money to creditors. Their job is to ensure the process is fair to all parties involved.
Timeline for Debt Discharge: The process from filing to debt discharge takes about four to six months. If everything goes smoothly, you could be debt-free in no time. It's a fast way to hit the reset button on your finances.
A. Chapter 13 Bankruptcy
Overview of Chapter 13 Bankruptcy: Chapter 13 is like a payment plan for your debts. You get to keep your property but pay back all or part of your debts over time. It's for people who can manage to pay their debts in a structured way.
Eligibility and Repayment Plan: It would help if you had a regular income to file for Chapter 13. The court approves a plan for how you'll pay creditors over three to five years. It's a commitment to paying off your debt while still living your life.
B. Debt Settlement
Negotiating With Creditors: Debt settlement means dealing with creditors to pay less than what you owe. It can be a good option if you can't pay the full amount but can pay a lump sum.
C. Credit Counseling and Budgeting
Financial Counseling and Education Programs: Credit counseling can help you get a grip on your finances without filing for bankruptcy. They teach you to budget and manage money. It's an excellent first step to take control of your financial life.
D. Selling Assets and Reducing Expenses
Non-Bankruptcy Strategies for Debt Relief: Before jumping into bankruptcy, consider selling things you don't need or cutting back on spending. These strategies can free up cash to pay off debts. It's all about finding ways to improve your financial situation without the legal implications of bankruptcy.
At Fleysher Law, our bankruptcy attorney provides skilled legal representation to help you with your financial concerns. We offer detailed guidance and support throughout the entire bankruptcy process, ensuring that you are well informed and prepared every step of the way. We will evaluate your financial situation, prepare and file your bankruptcy petition, represent you during your proceedings, and negotiate with your creditors.
Our bankruptcy attorney at Fleysher Law is committed to helping you regain financial stability. We provide legal expertise and compassionate support as you work toward a fresh financial beginning.
At Fleysher Law, we are dedicated to providing you with the personalized attention and expert guidance you deserve. Contact us today to explore your options and determine if bankruptcy is the right path for you.