Are you overwhelmed by credit card debt, medical expenses, or other debts? Do you feel like there is no way out? Chapter 7 bankruptcy can give you a “second chance” to regain control of your finances with a Fresh Start. Chapter 7 allows the court to legally discharge most of your unsecured debt, including credit card debt, medical debt, personal loans and sometimes even taxes! A “Liquidation bankruptcy,” as chapter 7 is often called, is the quickest, and most common form of bankruptcy. The benefit of this type of bankruptcy is that you have no future personal obligations for the discharged debts. Experienced bankruptcy attorneys can help you through every step of the filing process.
Your income level determines your eligibility for filing Chapter 7 bankruptcy. Your average monthly income must be less than the median income in your state or you must pass a means test if it exceeds the state median income. This test determines if your disposable income is high enough to make partial payments to unsecured creditors. Other bankruptcy options are available if you don’t pass the means test.
Chapter 7 may be the right choice for you if you:
As previously stated, Chapter 7 bankruptcy is the quickest and most efficient way to get out of debt, and most people prefer to file using this method if possible.
It is relatively quick. A typical Chapter 7 case takes three to six months to complete. (It may remain on your credit report for up to ten years.)
There is typically NO payment plan. A filer does not pay into a three to a five-year repayment plan.
Many debts are completely discharged. A Chapter 7 filer comes out debt free except for non-dischargeable debts like recent taxes, child support, and student loans.
You can protect your property. By using bankruptcy exemptions, a filer may be able to save what they own. If you do not have much in terms of “luxury” goods, then what you have could be protected or “exempt.” Your bankruptcy attorney will be able to navigate the exemption process with you.
You can keep a home or car in most situations. As long as you are current on your payments and can continue making your payments after your bankruptcy case, and you can exempt the amount of equity you have in the property, you may keep your home or car.
Several things take place once you file Chapter 7. You are assigned a case number and a bankruptcy trustee. The court clerk sends notices to each of the creditors listed in your case. These notices will set a date for the creditors’ meeting and will notify them of the automatic stay. The automatic stay typically stops all collection efforts and legal proceedings such as foreclosure. While an automatic stay is in place, creditors may not:
Working with your attorney, you may only be required to attend court once. This is for the Creditor Meeting. This is much like an interview with you under oath to discuss your assets, debts, and financial situation. Your creditors are allowed to attend this meeting and ask you questions. Most of the time, it is just you, your attorney, and your trustee. Once this meeting is over, the trustee will review your case to determine if you have a “no asset” or an “asset” case.
No asset cases make up the majority of Chapter 7 bankruptcy cases. This means that all you own falls into an exemption and is protected. Once determined that you have no assets, the trustee will report that to the court so your case can be finalized through discharge.
If you have an asset case and have non-exempt assets you are provided an opportunity to “re-purchase” these assets or surrender them to be sold to satisfy part of your debt to creditors. This can be done through auction to a third party. In some instances, you can use exempt finances to pay the cash value of an important property such as family property. The money collected from property sales is then divided among your creditors.
Once your Chapter 7 bankruptcy is filed and discharged, you may still have a mortgage, car loan, or other secured debt to continue paying. You can choose to commit to continuing to pay those debts through a Reaffirmation Agreement. You and your attorney will receive those agreements directly from the bank or creditor. Please review them carefully before signing them. Filing Chapter 7 bankruptcy may seem like an overwhelming and frightening process, but with an experienced attorney, you do not need to fear. The goal is to regain control of your finances in the simplest way possible. There is no way to escape the effects on your credit, but in the end, you will have room to breathe again and get a fresh start. Miller, Hollander, and Jeda are backed by 35 years of experience and want to help you to get a new start.
Miller, Hollander & Jeda’s founding attorneys began practicing in the early 1970s before putting down roots in the area and joining forces in 1992 to create the Naples, Florida, law firm that bears their names. Since its inception, Miller, Hollander & Jeda has focused on bankruptcy. The goal of our attorneys and our experienced staff, established at the outset and built upon year by year, is to use our extensive knowledge of bankruptcy law to answer the complicated questions you have regarding your financial trouble and help you solve your problems. We take pride in helping clients get a fresh start.