Looking for information about filing for bankruptcy Chapter 7? This can be a confusing and complex process. It’s also one that can lead many people to hesitate to reach out for help. It’s important to understand, however, that there is no shame in reaching out for professional help or for filing for a bankruptcy. Life happens, and you deserve judgement-free representation focused on seeing you through the legal process unscathed. That’s what the professionals at Ortiz & Ortiz, LLP are determined to provide.
Bankruptcies can be complex processes and can be difficult to handle properly. Many federal and state laws must be complied with when opting for this form of debt relief. And even within these statutes, there are exceptions and regulations that differ from situation to situation, making it important that you work with a professional who understand the law and potential qualifying factors.
What happens at a Chapter 7 consultation?
During your initial consultation with a qualified attorney, he or she will go over your circumstances and discuss your unique and specific financial situation. This will help determine exactly which course of action is right for you as well as determine if bankruptcy is even a viable option. This appointment also gives your attorney the opportunity to gather the initial documentation they may need form you to get started on your case, such as income verification, list of assets, and creditor information.
You’ll also want to take this time to go over any questions and concerns you may have regarding the process.
If it is determined that bankruptcy may be the right solution for you, the next step will be deciding which type of bankruptcy is best for your situation. One of the most common forms of bankruptcy is the Chapter 7.
Chapter 7 Stipulations
One of the first things that must be verified when determining if you qualify for a chapter 7 bankruptcy is the “means test”. Simply put, this test determines whether you make too much money to qualify for this form of bankruptcy. The general circumstances for a chapter 7 filing are as follows:
- Income below state median
- Significant debt
- Little to no substantial property
This type of bankruptcy is a “liquidation” bankruptcy, meaning that assets are sold off to pay existing debt. Anything not covered beyond that may be dismissed. Many times the debtor is allowed to keep assets such their home or vehicles, provided a “Reaffirmation Agreement” is signed. This an agreement to continue to pay the debt as agreed before the bankruptcy filing, along with bringing current any past due amount.
Once it has been established that you qualify for chapter 7, it is important to understand what is covered under this filing and what is not. This solution mainly covers unsecured debt, like credit cards and medical bills. It might not provide relief for secured debt such as mortgages or automobile loans, student debts, child support and alimony, or IRS taxes.
Chapter 7 Requirements
Before filing a chapter 7 bankruptcy, the client must complete a credit counseling course from one of the state approved agencies. There are numerous qualified services to choose from, and the cost is minimal. Your attorney can help you find one that fits your need.
You will also need several pieces of information for the court and your creditors. Although each specific case is different, here are some examples of information you may need to provide:
- Signed petition for bankruptcy
- Credit counseling certificate
- Debt repayment plan
- Proof of income
- List of expenses
- List of assets
- Exemptions list
- Information about any liens, judgments, or lawsuits against you
While this is not an all-inclusive list, it does help to give the debtor the understanding that this process requires a significant amount of paperwork and attention to detail. A common and avoidable problem for many bankruptcy cases is simple failure to have the proper documentation available when requested.
A personal finance course from a state approved agency may also be required following the filing. This must be done with the timeframe set forth by the court. Again, your attorney can help with finding the proper agency.
Chapter 7 Process
In most cases, the debtor is only required to make one court appearance and this is at the initial meeting. This is known as a 341 meeting, or, as it is sometimes referred to, the “meeting of creditors”.
Here, you will present the payment plan to the bankruptcy trustee, along with any creditors who choose to attend. Any adjustments to the plan or negotiations will also take place at this meeting. This is also your opportunity to dispute any debt you may feel that you are not responsible for.
Advantages to Chapter 7
- Fresh financial start after completion
- Short-term protections from foreclosure or repossession
- Wages and assets earned post filing are not added to bankruptcy
- No minimum debt requirement
- Quick completion (3 to 6 months)
Disadvantages to Chapter 7
- Loss of non-exempt property
- Foreclosure or repossession only delayed temporarily
- Co-signers on your debts face liability
- Cannot file again for 8 years
Although you do not legally have to hire an attorney to file bankruptcy in all cases, it would still be advisable to do so. There is no substitution for experience in bankruptcy law. With all of the paperwork, documentation, and strict procedures that need to be followed, even the simplest of mistakes can set the process back months or years.
The most important thing to remember is that there is no need to feel overwhelmed. While filing a bankruptcy can be an intimidating prospect for most people, having a qualified and understanding attorney can make the entire process much more comfortable and manageable.
Reach out to the experienced attorneys at Ortiz & Ortiz, LLP, today for more information about your case and how we can help you through this trying time. Many of our clients tell us that they feel a sense of relief and hope for the future after meeting with us for the very first time.