When your amount of debt begins to surpass your income, it may be time for a fresh start. Filing for Chapter 7 bankruptcy in Los Angeles, California will provide that fresh start by eliminating all or part of your debt, and setting up a payment plan for any remaining debts that are leftover.
If you are looking for a Chapter 7 bankruptcy attorney in Los Angeles please feel free to give us a call today and discuss how to best proceed with your case. We’ve helped many California residents eliminate their debts so they can be exempt from these crippling payments, which keep them from being able to gain financial freedom. Both Chapter 7 bankruptcy and Chapter 13 bankruptcy exist to help you get back on your feet and free yourself from your outstanding debts.
What Is Chapter 7 Bankruptcy?
Chapter 7 is the traditional liquidation or “straight” bankruptcy. In all Chapter 7 cases, federal law requires that a trustee is designated by the court to administer the debtor’s nonexempt assets for the benefit of the debtor’s creditors. This means, proceeds from the sale of your nonexempt assets can be used to pay back your creditors and tackle some of your outstanding payments. The trustee is appointed by the United States Trustee.
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Eligibility
Individuals are qualified as Chapter 7 debtors if they have a domicile, a place of business, or property in the United States. Note that citizenship is not required to file for Chapter 7 bankruptcy in California.
Discharge in Prior Case
You are eligible to receive a discharge in Chapter 7 Bankruptcy even if you previously received a Chapter 7 Bankruptcy discharge, as long as the prior Chapter 7 case in which you received a discharge was filed at least eight years before the filing of your new Chapter 7 case.
You can also receive a Chapter 7 discharge in your current case if you previously filed for Chapter 13 Bankruptcy, so long as the prior Chapter 13 case in which you received a discharge was filed at least six years before the filing of your new Chapter 7 case.
Credit Counseling Requirement
For cases filed after October 17, 2005, you must obtain a certificate from an approved credit counseling agency before you can file your case. This can be done over the internet and will likely cost approximately $35-$45. Your attorney will provide you with information on how to obtain this counseling.
An individual cannot file a Chapter 7 case unless, during the 180-day period before filing, he or she has received an individual or group briefing from and approved nonprofit budget and credit agency.
Automatic Stay
When a debtor files for bankruptcy, something called the “automatic stay” immediately stops any lawsuit filed against the debtor and virtually all actions against the property by a creditor, collection agency or government entity. Especially if a debtor is at risk of being foreclosed on, losing such basic resources as welfare or unemployment benefits, or a driver’s license or a job (because of a raft of wage garnishments), the automatic stay provides immediate protection.
Financial Management Course
For cases filed after 10/17/2005, you are required to complete a financial management course before receiving your discharge. You must have completed this course (usually about 2 hours) and submitted the certificate of completion to the court no later than 45 days after the date first set for your meeting with the Trustee. IF you fail to do this, you will NOT get a discharge.
Chapter 7 Bankruptcy FAQs
Am I Allowed to Spend Money Before Filing for Chapter 7 Bankruptcy in California?
Before filing for bankruptcy in California, the important thing to remember is to NOT rack up new debt. Of course, you might have sold property before you filed your case to pay your expenses, such as your rent, food, or utilities, and doing so isn’t wrong on your part. Be prepared to explain all of your transactions, and, when appropriate, provide supporting documentation. Bankruptcy court has the right, under federal law, to scrutinize your expenses.
If you pay back loans to friends or relatives within one year of filing, or even other creditors within 90 days of filing, then this may be considered a “preferential transfer.” A preferential transfer can be “undone” in bankruptcy.
You can protect most retirement funds in bankruptcy. Therefore, one of the most unfortunate financial mistakes that people regularly make before they file Chapter 7 bankruptcy is withdrawing retirement funds to pay off debt that bankruptcy could wipe out.
Of course, if you have any initial questions about bankruptcy law, bankruptcy code, or the steps you need to take in order to pass the bankruptcy means test, talk to your California lawyer as soon as possible to clarify anything you need to know.
How Much Debt Do I Need to File Chapter 7?
Over the years I’ve been asked many variations of this question from potential bankruptcy clients. Many think there is an actual minimum amount of debt required before one is eligible to file a bankruptcy case. There is no minimum debt requirement to file bankruptcy under any of the chapters.
Similarly, there is no maximum, but if you have an exceptionally high amount of debt you may need to restructure your debt relief and fill out different forms in order to file for bankruptcy. A California bankruptcy law firm will provide legal advice to help you through this process.
Although, there are no restrictions in either Chapter 7 or Chapter 11 bankruptcy cases. But Chapter 13, however, limits the amount of debts you have to $394,725 of unsecured debts which are non-contingent and liquidated (a definite calculated amount) and $1,184,200 secured debts which are non-contingent and liquidated.
Every California case focused on bankruptcy is as complex as the individuals involved. If you need help filing for bankruptcy but are unsure if you qualify for Chapter 7 or Chapter 13, only a California bankruptcy lawyer can answer your questions.
What Happens After You File Chapter 7 in California?
Many times, because of court ordered payment plans and consequences to credit histories, what happens after Chapter 7 bankruptcy (https://bankruptcy.findlaw.com/chapter-7/chapter-7-how-it-works.html). Depends on what debt is discharged in the bankruptcy.
Most unsecured debt, like credit card debt, can be discharged in bankruptcy. EXCEPTIONS include:
- Government funded student loans
- Certain forms of tax debt
- Federal tax liens
- Child support
- Alimony/spousal support
- Debts for personal injury or death cause by debtor’s operation of a motor vehicle
- Fines and penalties for violating the law
- Certain tax-advantaged retirement plans
- Cooperative housing fees
How Long Does the Chapter 7 Process Take?
In most cases, it takes approximately three to four months to complete a Chapter 7 bankruptcy and obtain a discharge. However, if you have a complex case or creditors object to your discharge, it can take longer.
What Happens After the Chapter 7 Process Is Complete?
From three to six months after you file, you’ll receive your bankruptcy discharge. A few days or weeks after your discharge is granted, your bankruptcy case will be officially closed, you will no longer be liable to all of your creditors, and you can move on with your debt-free life. This allows you to now rebuild your credit and get the most from your new debt-free status.
How Long Before My Chapter 7 Bankruptcy Falls off My Credit Report?
A Chapter 7 bankruptcy typically shows on your credit report for ten years from the date that your bankruptcy case was filed (not the date of discharge).
Can Student Loans Be Discharged in Chapter 7 Bankruptcy in California?
In California, many people who wish to file for Chapter 7 bankruptcy seek to do so because of their student loans. If their income is not enough to satisfy their monthly payments, they may fall into undue hardship.
Student loans are difficult, but not impossible, to discharge via Chapter 7 bankruptcy. Talk to your lawyer about your repayment plan and, if it’s too difficult to pay your loans back, you may be able to file to remove these debts.
How Much Does It Cost to Consult With a California Bankruptcy Attorney?
At our Los Angeles law firm, we offer a free legal advice consultation to any California resident interested in learning more about Chapter 7 and Chapter 13 bankruptcy. With detailed insight regarding your median income, child support payments, credit card debt, any property you own, and other outstanding dues and assets, your lawyer can estimate the cost of your filing fee if you are eligible for a bankruptcy discharge of these debts.
