Chapter 7 Bankruptcy

A chapter 7 bankruptcy case does not involve the filing of a plan of repayment as in chapter 13. Instead, the bankruptcy trustee gathers and sells the debtor's nonexempt assets and uses the proceeds of such assets to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code.

Do any of the Following Statements Describe you:

  • I can barely make the minimum payments on my credit cards.

  • I have amassed so much credit card debt that I cannot pay my mortgage.

  • I am actually using some credit cards to pay other credit cards.

  • I may lose my house to foreclosure

  • I have enormous medical bills that I cannot pay.

  • My creditors have sent my accounts to collection agencies who now call me day and night.

  • I lost my job and have no income.

  • My wages are being garnished.

A Chapter 7 Bankruptcy filing will stop all of the above, and give you the opportunity to decide how to handle your secured debts. The majority of our Chapter 7 Bankruptcy clients keep everything and lose nothing.

Chapter 7 Bankruptcy is often referred to as the “fresh start”.  The Debtor is absolved of liability for both secured and unsecured debts. The Debtor will be able to hold on to any number of assets through this process by claiming exemptions under the Federal Chapter 7 Bankruptcy Code.  For example, a car or a house on which the debtor is currently making payments, provided that any equity in property can be covered by an exemption.

Where a debtor is current on payments on a car or a house, and there is no equity, these again are assets that the debtor will be able to keep. In a situation where the debtor is not current on these assets, the relief from other unsecured debt provided by Chapter 7 Bankruptcy may provide the Debtor the financial freedom to get current on these assets.
Chapter 7 Bankruptcy is generally used in situations where a Debtor has become unemployed or lost a substantial amount of his or her income. The lifestyle of the Debtor is no longer one he can afford. Provided the Debtor can pass the means test, these debts will be eliminated as to the Debtor.

When a Chapter 7 Bankruptcy case is completed, the debtor emerges virtually debt free. The creditors will be notified by the Trustee that the debt as to the debtor has been discharged and therefore is no longer liable for the debt.

It is also possible through a Chapter 7 Bankruptcy to follow the case with a Chapter 13. This will be a situation where a low income debtor has come into money or a new job. Once the unsecured debt is discharged and the debtor is again in a position to generate income, a plan can be proposed to the trustee to get current on assets such as a house or a car. Please see our dedicated Chapter 13 Bankruptcy page for further information.

The Bankruptcy Guy is a designated debt relief agent. He provides legal assistance to consumers seeking relief under the Bankruptcy Code. He represents consumers, individuals, debtors and businesses in chapter 7, chapter 11 and chapter 13 bankruptcy matters throughout all of San Diego County.

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