Prerequisites To Check Before Filing Chapter 7 Bankruptcy

Are you facing financial hardship and are considering filing bankruptcy in California, specifically Chapter 7 bankruptcy?

Whenever people find themselves in this situation, they search for answers to the following questions:

• Do they qualify for Chapter 7 bankruptcy?
• How fast can they get relief from their debt burden?
• How much does it cost to get out of their debt burden?

Chapter 7 is the most popular way to overcome a financial crunch, especially in the California region. Surprisingly, among the 45,831 bankruptcies filed in California, the majority were chapter 7.

We will discuss eligibility, qualifying criteria, and other variables regarding chapter 7 bankruptcy in this post.

What is Chapter 7 Bankruptcy Eligibility?

Chapter 7 provides discharge from all unsecured debts such as credit card debts. You can start afresh after getting relief. Typically, qualifying after bankruptcy takes 3-4 years. When it comes to filing a chapter 7 bankruptcy, essentially, you need to know where you stand as per the income-  

1. moderate to low income,
2. a significant amount of debt, and 
3. no substantial property.

However, consulting an agency for credit counseling might help you make a better decision regarding the bankruptcy U.S.C codes. Here are some eligibility sets for chapter 7.

• In the last eight years, you cannot have filed a Chapter 7 bankruptcy.
• In the last six years, you cannot have filed a Chapter 13 bankruptcy.
• If your case was dismissed, you must wait for 181 days before another attempt.
• Filers must undergo a test of financial scrutiny. It is a must to check your disposable income to make payments to unsecured creditors. Either your income must fall below the median income or you have to pass the mean test t
• If you file, but the court determines that you are trying to defraud your creditors, the court may dismiss your case (11 U.S.C. § 707(a)). Therefore, just ensure all the court formalities by getting assistance from a skilled and experienced bankruptcy attorney.  

Who qualifies to file Chapter 7 Bankruptcy?

Chapter 7 bankruptcy is available to almost everyone who owns property or has a permanent residence or business in the United States. The laws slightly vary from one state to another.

In California, bankruptcy exemptions allow you to keep certain property and assets in a Chapter 7 bankruptcy. In addition, chapter 7 protects your home and car equity, as well as your jewelry, clothing, and most retirement funds up to a certain amount.

Here are some pointers to check your qualification for Chapter 7:

• The amount of unsecured debt you owe exceeds half of your annual income.
• You are ready to sacrifice more than 5 years in clearing your debts.
• You can handle the creditors and find out a feasible plan to pay them.
• You can survive with little disposable income.
• Your monthly income is below the median level in your state.

Chapter 7 Pre-Bankruptcy Credit Counseling

Consulting a bankruptcy agency in Los Angeles before filing for chapter 7 bankruptcy is a  must. You must consult this course within six months before the date you file for bankruptcy. Doing so reduces the chances of Chapter 7 Bankruptcy denial.

You must file a certificate with the court once the counseling is completed. Once you file your case, you must also take a debtor’s education course.

What Are The Consequences Of Chapter 7 Bankruptcy?

As a result of bankruptcy, you can lose some of your assets (money and property). After filing for chapter 7, you have to close down all the business operations.

Also, chapter 7 can badly affect your credit score. It will stay on the credit score for the next 10 years.

Chapter 7 Bankruptcy will make it nearly impossible to get a mortgage if you don’t already have one. Getting a loan will become difficult after filing the case.

To get rid of secured debts, like car loans and mortgages in Chapter 7, you need to surrender the asset to the creditor. The creditor must accept the asset as full payment of the amount owed.

What is the role of Bankruptcy Attorneys in filing for Chapter 7 Bankruptcy?

Bankruptcy attorneys can help individuals file for Chapter 7 bankruptcy in several ways. They can provide significant assistance in filing for Chapter 7 bankruptcy. 

Here are a few ways in which they can help:

• Provide Legal Expertise: Bankruptcy attorneys have extensive legal knowledge and experience in the area of bankruptcy law. They can provide guidance on the legal requirements for filing for bankruptcy, including eligibility, exemptions, and the process for filing.
• Determine Which Bankruptcy to File For: They can assist in determining whether Chapter 7 bankruptcy is the appropriate option for an individual's financial situation. If so, they can guide them through the process of filing a bankruptcy petition, including preparing and filing the necessary paperwork with the bankruptcy court.
• Prepare and File the Petition: Bankruptcy attorneys can help prepare and file the necessary legal documents for filing for Chapter 7 bankruptcy. This includes drafting and filing the bankruptcy petition, schedules, and other required forms.
• Represent You in Court: Bankruptcy attorneys can represent you in court during the bankruptcy process. They can advocate for your rights and interests and help you navigate the court system.
• Provide Financial Guidance: Bankruptcy attorneys can provide guidance on how to manage your finances both during and after the bankruptcy process. They can help you develop a plan for rebuilding your credit and getting back on track financially.

Overall, bankruptcy attorneys can provide valuable legal and financial guidance and support throughout the process of filing for Chapter 7 bankruptcy.