Chapter 7 Bankruptcy


Chapter 7 Bankruptcy- Liquidation 

Chapter 7 is designed for debtors in financial difficulty who do not have the ability to pay their existing debts.  Debtors generally must complete the “Means Test”, which is designed to determine whether the debtor is eligible for a Chapter 7 filing.  If not eligible, the debtor must file for Chapter 13 bankruptcy.

If you file for bankruptcy, will you lose everything?  No, probably not.  California law exempts certain personal property from the clutches of creditors.  We will maximize your exemptions so you may keep those personal possessions most dear to you.  In many cases, our clients keep most of their possessions.  For instance, California law allows a Chapter 7 debtor to claim an exemption of up to $22,075.00 in cash assets.  Most household goods, appliances and furniture are exempt from creditors.  If you have money invested in a qualified retirement savings plan, that money is entirely exempt from the reaches of the creditors.  Of course, each case is different and must be evaluated independently.

The primary benefit of filing a Chapter 7 case is to obtain a discharge of your existing unsecured debts quickly.  Credit card debt, medical bills and certain taxes are dischargeable, which means that if you comply with the rules, you are entitled to legally walk away from these obligations and start fresh.  The Chapter 7 bankruptcy process is designed to be fast and efficient.  Most Chapter 7 cases take approximately 90 days from the date of filing the petition to the date you obtain your discharge.

Unfortunately, not all debts are dischargeable in a Chapter 7 bankruptcy.  Before filing for bankruptcy, we will identify any non-dischargeable debts.  We can work with you after the bankruptcy is completed to negotiate affordable payments on those debts.  For instance, if you owe recent income taxes, we can negotiate an affordable payment plan with the IRS and the State of California.