Are you considering filing for bankruptcy? If so, you probably have a lot of questions. At The Law Offices of Paul Y. Lee we work with individuals all the time who know that something needs to change if they’re going to move forward but they’re not sure if bankruptcy is right – or which option to choose. The best way to get a better idea of your own best move is to contact us at 951-755-1000 for your free bankruptcy evaluation. Today we’ll give you a rundown of the basics about Chapter 7.
The requirements for filing Chapter 7 bankruptcy
Chapter 7, which is also referred to as liquidation bankruptcy, is available for people who own property or a business. There are a variety of requirements and you do have to qualify in order to file Chapter 7. For example, if you’ve had a bankruptcy dismissed in the six months prior to filing, you will not be eligible for filing Chapter 7. To learn more about the requirements and how they affect you personally, contact The Law Offices of Paul Y. Lee today.
Chapter 7 allows you to keep certain exempt possessions
Under a Chapter 7 bankruptcy, you’d be able to keep specific exempt positions. For example, almost all lines, such as car loans or home mortgages, would remain. Depending on your specific situation, the value of the property you claim as exemptions will vary.
Other assets will be sold by the trustee
With the exemption of the exempt possessions, your assets will be sold to pay back your creditors. Most of your unsecured debt will be discharged but there are examples, like income taxes of less than three years, child support, property taxes, student loans, and fines ordered by the court. Property settlements as well as spousal support are generally not covered by any bankruptcy.
Chapter 7 will remain on your credit report for ten years
A Chapter 7 bankruptcy stays on your credit report for ten years from the date you filed for bankruptcy. Note that this is quite different than a Chapter 13 bankruptcy, which stays on your credit for seven years. While you do want to consider the difficulty of obtaining new credit while a bankruptcy is on your record, it’s also important to remember that owing a lot of debt can affect your credit just as much.
The trustee could deem your bankruptcy “abusive”
In a Chapter 7 bankruptcy, the trustee will take a look at your debts and make a decision about whether or not you could repay them reasonably within five years. If they deem that you could then they may deem the bankruptcy “abusive.” This still leaves you with options, like filing for Chapter 13, but it would prevent you from filing Chapter 7.
Do you have questions about the process of bankruptcy in California? At The Law Offices of Paul Y. Lee, we’re here to make the process quick and painless as possible. Call us today at 951-755-1000 for your free bankruptcy evaluation.
