What is Chapter 7 Bankruptcy? – An Explanation from a Clearwater Chapter 7 Lawyer.
In this type of bankruptcy filing, most of your unsecured debt can be forgiven and will result in a financial hit to your credit that will stay with you for 7-10-years. With Chapter 7, you might (not often) have to hand over some of your assets such as cars, valuables, jewelry or similar items. Debts and loans in the form of child support or student loans aren’t usually allowed to be claimed in a Chapter 7 filing. While you may have a hard time securing loans or getting a credit card after your Chapter 7 filing; chances are you will see your credit score rise in just months.
Determining your Chapter 7 Eligibility – Defined by a Clearwater Chapter 7 Attorney.
- An attorney will likely start by doing an assets and expenses assessment in what is commonly referred to as a “means test.” A means test will compute your income and expenses and other daily living factors to determine whether or not you have the “means” to handle your debts. This isn’t necessarily a complicated test, just a process that the courts use to deter or identify those who are filing unlawfully.
- If you have filed for Chapter 7 in the past, an 8-year period must have elapsed before you’re eligible for filing again.
- If a previous petition was dismissed because you failed to appear or didn’t comply with the bankruptcy courts in some manner, you have to wait 180-days before filing for Chapter 7.
The Chapter 7 Process – Defined by a Clearwater Chapter 7 Bankruptcy Law Firm
The Chapter 7 filing process will take anywhere between 4-and-6 months and goes through a pretty standard process. Here is a point by point as to how it will likely work for you too.
- Credit Counseling – 180-days before filing, you will need to have gotten credit counseling from an approved agency before officially filing a Chapter 7 petition.
- Hire a Chapter 7 Attorney – At the same time, we suggest you get a Clearwater Chapter 7 attorney (we would be happy to help you), so you can plan for your bankruptcy filing. You do not have to have an attorney to do this, but we highly recommend it because there are deadlines and specific paperwork that has to be done correctly for your bankruptcy to be approved.
- The Paperwork – Your Clearwater Chapter 7 lawyer will file the paperwork after you have collected all the materials they have requested. Once this paperwork is filed, it triggers what is called a “stay.” A stay will stop creditors or collectors from contacting you or attempt to collect the debt you owe. They cannot garnish your wages, file a lawsuit against you or harass you for payment at this point.
- A Case Trustee – A trustee will then be assigned to your Chapter 7 case and manage the details, deadlines, and status.
- The Creditors Meeting – The trustee is charged with setting up a meeting with your Clearwater Chapter 7 bankruptcy law firm, you and the creditors to answer questions about your finances.
- Eligibility Determination – After that meeting, the trustee will determine whether or not you are eligible for bankruptcy.
- Determining Your Nonexempt Assets – If eligible for Chapter 7, the trustee will start trying to assess your nonexempt assets. These assets are things like home equity (not your home), cars, property owned, valuables or jewelry. Most Chapter 7 cases usually have “no assets” that qualify for the specifics in Chapter 7 filings.
- Identifying Secured Debts – These are debts like car loans and mortgages that the trustee will be seeking to understand more about and the asset’s worth. At times, the trustee may require you to pay the sum of that asset off to keep it or to make some sort of other financial arrangements, such as leaving it off the bankruptcy filing.
- Financial Education – Once your bankruptcy details are filed and approved, you will have to prove that you have taken a financial education course before the Chapter 7 petition can be discharged. (meaning debts are forgiven)
If you are thinking about filing for bankruptcy, we encourage you to reach out to our Chapter 7 law firm either online or by phone so we can discuss your case.