Chapter 7 Bankruptcy

What is Chapter 7 Bankruptcy?
If you are struggling to catch up on credit cards, medical bills, payday loans and other unsecured debts despite your best efforts, Chapter 7 bankruptcy may be an option for you. Chapter 7 bankruptcy is often referred to as liquidation because a bankruptcy trustee can liquidate (convert to cash) your non-exempt assets to pay part of your outstanding bills. The term liquidation is rather misleading, though, since most people filing bankruptcy in Chapter 7 cases do not have any non-exempt assets, and thus there is no actual liquidation. In order to qualify for Chapter 7 bankruptcy, you must pass a means test. Learn whether you are eligible to file Chapter 7 bankruptcy and how filing Chapter 7 bankruptcy may help you be excused from your credit cards and other unsecured debts by getting in touch with a local bankruptcy lawyer.

Chapter 7 Bankruptcy Timeline
How Long Do Chapter 7 Bankruptcy Cases Take? Chapter 7 bankruptcy cases move relatively quickly, and you may receive your discharge in just a few months. A discharge will eliminate unsecured debts like credit card debt, medical bills, most personal loans, judgments resulting from car accidents, deficiencies on repossessed vehicles, some older tax debts, payday loans, and garnishments. Certain debts are classified “non-dischargeable debts” and cannot be discharged, or can only be discharged under very specific circumstances. These include child support, most student loans, and many tax debts.

What is the Chapter 7 Bankruptcy Means Test?
Before filing for Chapter 7 bankruptcy, you will have to qualify through a Chapter 7 means test.  You may have heard about the changes that took effect in October 2005.  The media hype gave the impression that bankruptcy was no longer a viable option because the means test would disqualifying most people from filing for Chapter 7 bankruptcy.   The truth is that more than 96% of potential Chapter 7 clients who qualified before the new law still qualify.  In the unlikely event that you are one of those few who do not, filing bankruptcy may still be an option; this time in the form of Chapter 13 bankruptcy.  Here are some reasons why filing Chapter 7 bankruptcy may not work for you.  The Chapter 7 means test is a two-step process which begins with your median income comparison. We determined your six-month average monthly income and compared it to your state’s median income for a family the same size as yours. If your income is at or below the median income, you qualify for Chapter 7 bankruptcy.  If your income is higher than the median income, it doesn’t mean that you can’t file for Chapter 7 bankruptcy, but rather it triggers the second step of the Chapter 7 bankruptcy means test.  Calculating disposable income and unsecured debts is the second step of the Chapter 7 means test.  If your disposable income over the next five years is less than approximately $6,000 ($100/month),  you “pass” the Chapter 7 bankruptcy means test and can thus file for Chapter 7.  A local Bankruptcy Lawyer can best further explain how disposable income is calculated.   If your disposable income during that five year period is greater than $6,000 but less than $10,000, you may still be able to file for Chapter 7 bankruptcy protection, depending upon your allowed expenses.  Our experienced bankruptcy attorney can sit down with you in a free initial consultation to make this determination..

Credit Counseling Courses
Before Filing your Chapter 7 Bankruptcy Case, You Must Receive a Briefing from a Credit Counseling Agency.  The law requires that you receive a Credit Counseling Briefing from a certified credit counseling agency before filing bankruptcy, regardless of whether you’re filing Chapter 7 bankruptcy or Chapter 13 bankruptcy. The agency will explain financial management and how to do a budget analysis, and will also discuss alternatives to filing bankruptcy. While there are some hardship exceptions to this rule, most debtors will have to get this briefing, and failing to do so before filing may result in your case being DISMISSED.  Your Chapter 7 bankruptcy lawyer may refer you to the appropriate agency, or you can purchase an approved Credit Counseling Briefing online.

Get Protection from Your Creditors When You File for Bankruptcy
A fresh financial start may be in sight following these steps. You will first have to complete your credit counseling session and then provide all of the necessary information to your attorney, who will review your situation and prepare a bankruptcy petition. You will have to list personal information, including all of your income, assets, expenses and debts, on your bankruptcy petition and any related forms and schedules. You will also have to include any applicable exemptions to which you’re entitled. How important is it to disclose all of your debts when seeking to file for Chapter 7 bankruptcy? Whether or not failing to list certain debts is an honest mistake or a deliberate action, bankruptcy fraud is a serious offense that can be prosecuted. From here, your attorney files the petition in local bankruptcy court, which will appoint a bankruptcy trustee to your case. After filing bankruptcy, an “Automatic Stay” is entered in most cases to prevent creditors from taking any further action against you outside of bankruptcy court.  Remember that in some circumstances an “automatic stay” may have a limited effect on protecting your assets and only an attorney well versed in bankruptcy can explain its limits.  Our Office is ready to sit down one on one to discuss your situation.  Remember we handle bankruptcy cases in the Hudson Valley area including Dutchess, Orange, Putnam and Westchester Counties.

You Have to Do Your Part to Get Your Bankruptcy Discharge
Be sure to follow your attorney’s advice and do not attempt to conceal your property, destroy any financial records, violate any court order or make enormous, last-minute charges on your credit cards prior to filing bankruptcy. Please note that you may only file for Chapter 7 bankruptcy once in eight years. Understanding the Chapter 7 bankruptcy timeline is critical to making good decisions for your financial future.

Chapter 7 Bankruptcy Exemptions
Protect Your Property from Creditors Exemptions protect certain property from liquidation in bankruptcy. The specifics vary from state to state. Exemptions typically include your primary residence, tools, work equipment, vehicle, certain items of personal property and numerous other categories of property. In most cases, exemptions will protect all of your property. If not, your court-appointed bankruptcy trustee can liquidate your non-exempt assets to pay your creditors. However, a trustee will only liquidate in most cases if he or she can obtain enough money from a sale to make a significant payment to your creditors.

A new Bill just signed into law in New York increases many of the limits of exemptions.  This means that you able to keep more of the equity in your home, car and certain other assets.

Keep Your Car – and Other Assets – by Reaffirming Secured Debts
While Chapter 7 bankruptcy may help eliminate unsecured debts, secured debts are generally not separated from the assets that secure them. That means that if you want your car loan discharged, you’ll have to give back the car. However, if you want to keep your car (or another asset that serves as security for a debt) you may be able to negotiate a reaffirmation agreement with your creditors in Chapter 7 bankruptcy. By reaffirming a debt, you agree to continue making payments in exchange for the right to keep your property.

The Final Step Before getting your bankruptcy discharge, you must complete an approved Debtor Education Course: a personal financial management course required by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Your attorney may refer you to an approved financial management class, or you can purchase an approved Debtor Education Course online at www.Debtorcc.org.  The online fee is only $14.95.

Chapter 7 Bankruptcy May Provide the Fresh Start You Need
Filing bankruptcy – whether it’s Chapter 7 or Chapter 13 – is a tough decision that shouldn’t be undertaken lightly. However, if you’re in a difficult financial situation that just keeps getting worse, filing bankruptcy may be the opportunity you need to seek broad protection against creditors, regain control of your financial life, and rebuild your credit after bankruptcy with the help of friendly lenders. Don’t live another day in financial torment.