CHAPTER 7 Bankruptcy Attorney
Chapter 7 is the most common bankruptcy chapter filed. It is called a liquidation bankruptcy because this chapter of the Bankruptcy Code provides a “liquidation” of non exempt assets. A non exempt asset is any property you have that can not be protected/exempted. The good news is that in a chapter 7 bankruptcy the debtor can keep “exempt” property. California has two main systems of exemptions, including one that allows the debtor to protect up to up to $30,825 in assets, cash, and other property.
This means that whether you have $30,825 in cash, bank accounts, vehicles or any other property, it is very likely you can keep this property safe from creditors in a bankruptcy court. This property will still be yours after the bankruptcy case is over.
In most bankruptcy filings, everything the debtor owns falls into these exemptions and there are no assets left over for the creditors. These cases are deemed “no asset” cases. At the end of these common cases, the Bankruptcy Court then usually will order discharge of your remaining debt.
Keep in mind that there are a few debts which may not be discharged, including most taxes, student loans and domestic support obligations.
More great news…
Immediately upon the filing of the bankruptcy and for the duration of the process (unless ordered by the court) an automatic stay is in place and the creditors may NOT contact or in any way try to collect from the you. This provides immediate peace of mind for those debtors who are used to being constantly reminded of their debts by annoying phone calls and letters
Typical Steps in a Chapter 7
(1) When you call the LaVelle Law Offices asking about a Chapter 7 Bankruptcy you will first speak with an attorney who, in a few minutes, will help you determine, though asking you a series of questions, if you qualify for a Chapter 7 bankruptcy filing and if filing bankruptcy is your best option.
(2) You will then set up an appointment to meet in person or via phone conference or zoom video conference with the attorney.
(3) You will be sent several documents to review that explain more about Chapter 7 bankruptcy, including a FAQ sheet as well as an explanation of the different types of bankruptcies. These are important documents required by the Bankruptcy Court and can be quite informative.
(4) In your meeting with the attorney, you will review in more detail your specific financial situation. You will review your credit report, liabilities (creditors) and assets. The attorney will explain how you may be allowed to protect these assets.
(5) Your attorney will then work with the information you provide and fill out your bankruptcy petition.
(6) Before your petition is filed you must complete a credit counseling course approved by the Bankruptcy Court. The LaVelle Law Offices recommends the following online course: Debtorcc.org. This class takes approximately one hour and contains valuable financial tips and advice.
(7) Once you complete this course, and the petition is ready to be filed with the court, your attorney will meet with you in person or over a zoom video conference and have you review the petition for accuracy and then we prepare a final draft to be filed with the court.
(8) The Petition is then filed and an AUTOMATIC STAY is put in place. Your creditors are notified that the Bankruptcy Court has issued a stay against any efforts they have to collect debts from you. The creditors must ask the bankruptcy court for permission if they want to continue to collect from you while this stay is in place. These requests are rare and they will notify your attorney, who may argue against such a request.
(9) Approximately 30 days after your petition is filed with the court, there is a meeting of creditors. The meeting of creditors is an opportunity for the the Trustee to ask you questions to clarify anything on your petition. If you have any creditors that would like to ask you questions about your petition, they may also show up, but this is extremely rare. In a overwhelming majority of the cases, creditors do not show up for the “meeting of creditors;” it is just you, your attorney and the trustee.
(10) Before your bankruptcy can be discharged and your debts relieved, you must complete one additional financial management course.
(11) This brings us to the final step, which is discharge by the Bankruptcy Court. If all goes smoothly, and it usually does, the court will issue an order of discharge within 3-4 months from the time you filed the petition. All of your eligible debts are discharged/wiped out and this is the time to celebrate your fresh start and plan for a better financial tomorrow!
The Chapter 7 Discharge
The goal of any bankruptcy case is to achieve a discharge. In 95% of the cases filed with attorneys, debtors receive a discharge from the court, but of course, every case is different and no results are guaranteed. A discharge releases debtors from personal responsibility for many debts and keeps creditors from collecting on those debts.In a majority of cases, the court will issue a discharge within 90-120 days after filing.
Why would a court deny a discharge? Here are some of the uncommon occurrences:
- the debtor failed to explain satisfactorily any loss of assets
- the debtor committed a bankruptcy crime such as perjury
- the debtor failed to obey a lawful order of the bankruptcy court, including making court fee payments
- the debtor fraudulently transferred, concealed, or destroyed property that would have become property of the estate
- the debtor failed to complete an approved instructional course concerning financial management.
Keeping your car after your discharge
Some creditors may retain their rights to seize property for “secured debts” even after a discharge. If a debtor wants to keep secured property, for example, and automobile, they may be able to affirm their credit agreement with the creditor. This re-affirmation states that the debtor will remain liable to the creditor after the bankruptcy but will get to keep the property as previously agreed to. Under this agreement, the debtor must continue to pay the creditor or the creditor can seize the property or sue the debtor even after the bankruptcy discharge.
Because these re-affirmation agreements eliminate some of the benefit of having a “fresh start” these agreements should not be taken lightly and should only be re-affirmed if the debtor can comfortably afford to continue to make payments. If the creditor is represented by an attorney, the debtor’s attorney must approve of the re-affirmation, advise the debtor of the perils and consequences of re-affirming the debt and certify to the court that the attorney believes the re-affirmation will not create an undue hardship for their client or the client’s dependents.
Practically applied, courts do not like to approve these reaffirmation agreements and often they will be denied, even if your attorney signs off on them. Usually the company you are making your car payments to will continue to allow you to make these payments and keep the car, even after your discharge. This is referred to in the industry as a “pay and stay.” You keep paying and they let you keep the car.