Chapter 7 Bankruptcy

If you are struggling to catch up on credit cards, medical bills, payday loans and other unsecured debts, a Chapter 7 bankruptcy may be an option for you. Chapter 7 bankruptcy is often referred to as liquidation because a bankruptcy trustee can liquidate (convert to cash) your non-exempt assets to pay part of your outstanding bills.

However, in most cases, exemptions will protect most if not all of your property as many people filing Chapter 7 own only exempt property, which is property protected from liquidation. Exemptions typically include your primary residence, tools, work equipment, vehicle, certain items of personal property and numerous other categories of property. 

In most cases, exemptions will protect all of your property. If not, your court-appointed bankruptcy trustee can liquidate your non-exempt assets to pay your creditors. However, a trustee will only liquidate in most cases if he or she can obtain enough money from a sale to make a significant payment to your creditors.

Chapter 7 bankruptcy cases move relatively quickly, and you may receive your discharge in just a few months. A discharge will eliminate unsecured debts like credit card debt, medical bills, most personal loan, judgments resulting from car accidents, deficiencies on repossessed vehicles, some older tax debts, payday loans, and garnishments. Certain debts are classified "non-dischargeable debts" and cannot be discharged, or can only be discharged under very specific circumstances. These include child support, most student loans, and many tax debts.

In order to qualify for Chapter 7 bankruptcy, you must pass a means test; however, most potential Chapter 7 petitioners will qualify. In the unlikely event that you are one of those few who do not qualify for Chapter 7, filing bankruptcy may still be an option; this time in the form of Chapter 13 bankruptcy.

Chapter 13 Bankruptcy

Chapter 13 bankruptcies often provide a solution for people who have faced short-term financial setbacks like job loss, illness, or large unexpected expenses. For people who have been derailed by a crisis and fallen behind on their bills, but who have regular income and are in a position to make regular monthly payments, filing bankruptcy under a Chapter 13 plan may allow the breathing room necessary to get back on track.

Many people looking to stop foreclosure or avoid repossession choose Chapter 13 bankruptcy, because it combines the automatic stay with the ability to catch up past due payments over a period of three to five years after filing bankruptcy while keeping current payments up to date.  In most cases, the court will enter an automatic stay as soon as the case is filed, prohibiting creditors from taking any further collection action while the bankruptcy case is pending, or until further order of the bankruptcy court.

At HOWARD | NASSIRI, we can explain your options and help you determine whether filing Chapter 7 or Chapter 13 bankruptcy is the right option for you. Our bankruptcy attorneys can guide you through the process, helping to ensure that all filing requirements and deadlines are met and that you have accounted for all of your allowable expenses and proposed a plan that will allow you to make payments while keeping up your regular expenses.

Filing bankruptcy - whether it is Chapter 7 or Chapter 13 - is a difficult decision that should not be undertaken lightly. However, if you are in a difficult financial situation that just keeps getting worse, filing bankruptcy may be the opportunity you need to seek broad protection against creditors, regain control of your financial life, and rebuild your credit after bankruptcy with the help of friendly lenders.  Call HOWARD | NASSIRI now for a free consultation.