Chapter 7 Bankruptcy
Someone who files Chapter 7 bankruptcy doesn’t need to pay debts. However, not everyone qualifies, and even if you did, you could lose assets. There’s always some element of risk in Chapter 7, and you’ll want the help of a good bankruptcy lawyer.
One major concern of many people is whether they have to give back any of their possessions if they file bankruptcy. The answer is that it depends on how much “stuff” you have. However, if you’re like many people who don’t own much, have no real estate or other major things, chances are that the harassing creditors won’t be able to get their hands on your stereo, your CD collection or, since you’re viewing this on the web, your computer. We can likely make it so you give nothing back. You’ll probably keep all your assets.
Do I Qualify for Chapter 7 Bankruptcy
Chapter 7 bankruptcy is for people who really don’t have any way to make any payments on their debts. To level the playing field, they made it so you can’t earn a lot of money and just say you spend it all on household needs. Generally speaking, to qualify for Chapter 7, you’d have to not earn over the median income in your state. In California, in 2018, the median income is about $55,000 annually for a one-person household, before deductions. So people earning less money than that a year will have an easier time to file Chapter 7.
The Means Test to file Chapter 7
However, Congress added a long complicated form to be the guard dog for who gets into Chapter 7. This is called the Means Test. Think of a 15-page tax return, and you have a pretty good idea what it’s like to fill out. The general gist of it is this: if you don’t earn less than the median income, only certain household expenses are “allowable.” If you spend things for things not on the form, it’s presumed unreasonable and you probably could have extra money for repaying your debt. Consequently, this form is a combination of what you really spend money on and “allowances” and standard deductions.
Even if you don’t qualify for Chapter 7, you can still likely do Chapter 13 bankruptcy, where interest is frozen, and you make payments on your debt and can’t get sued.
Will I Ever Get Credit Again?
Bankruptcy hurts your credit. It’ll appear on your credit report for up to ten years after you file. Credit agencies report credit histories accurately, good or bad, for seven years. Bankruptcy is different; Experian , Equifax and Trans Union report them for a longer duration. However, according to former clients, this is usually not as big a problem as most people think. Credit lending agencies know you won’t be able to file another bankruptcy for at least 8 years, and therefore, they don’t have that risk to bear.
You will not get as high a credit limit as you once had, or be able to borrow a large sum of money. But getting some credit (such as a secured credit card) shouldn’t be that difficult. You can then rebuild your credit over time. What you will likely face is higher interest rates, required higher down payments, more points, etc. Some people do have difficulty rebuilding their credit, but it is usually due to other factors besides bankruptcy, such as their employment record, other credit problems, etc. In any event, we can provide you with excellent materials for helping you rebuild your credit should you so desire.
See our article about Credit After Bankruptcy.
What about Discrimination by my Employer or the Government?
You are protected against your job firing you or the federal government not giving you a student loan, etc. Your rights are all spelled out in 11 USC 525.
Why do I Need a Lawyer for a “Simple” Bankruptcy?
Only a lawyer can give you legal advice, and only an attorney can practice law. Paralegals can’t show up at court with you. No one but lawyers can fight a creditor if they contend any part of your case.
Hidden Costs and Dangers of Bankruptcy Paralegals
You may save a few hundred dollars on a bankruptcy paralegal, but they can’t do any of the above. You do everything else… alone. Because paralegals aren’t licensed and have no oversight, their mistakes can cost you thousands of dollars. We’ve seen things like overlooked equity in your car where you’re forced to sell it — there is nothing you can do. Or they charge you hundreds of dollars more to try to fix it. By the time all the fixes are in, you’ve paid more than for a good bankruptcy attorney, and gotten far worse quality. Don’t take a chance and cut corners with a legal process as important as this one which impacts all of your financial affairs and could impact your money or car.
A Chapter 7 Bankruptcy Can Get You a Fresh Start
You’ll want a skilled bankruptcy attorney to help you with this, particularly if you’re in California. The Chapter 7 California bankruptcy exemptions in California are different than most states, and good Los Angeles bankruptcy lawyers can help protect most (if not all) of your assets for you. So remember, the difference between this and Chapter 13 is that you don’t make payments on your debt. Discharging your debt with nothing to your creditors is the essence of a Chapter 7 bankruptcy.
We’re qualified, and affordable
We’ve successfully helped thousands of Los Angeles bankruptcy seekers file Chapter 7 bankruptcy. We have a flexible payment plan. We actually strive to have good customer service, which is why I typed all this bankruptcy information to help people. And we’re affordable.
Drop a line and let’s have a no-pressure consultation, and start getting some peace of mind, some hope, and let’s start working on your fresh start.
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