Chapter 7 Bankruptcy

+What happens after the Chapter 7 Bankruptcy Meeting of Creditors?

In the San Diego Bankruptcy Court, your discharge and case closure is due in about 2 months after the meeting of creditors.  The bankruptcy court then issues an Order for Discharge of your debts and… you can now go about your business as usual.  Your credit can be rebuilt.  Your income to debt ratio shows all income and zero debt; hence you’re better prepared to take on new loans after bankruptcy.  Credit scores improve after bankruptcy, because you’re no longer held down by yesterday’s obligations.  Certain debts like student loans will not be discharged in bankruptcy (save for ridiculously rare exception, but that’s another story); such debts will survive the bankruptcy.  All your pedestrian debts–the credit cards, medical bills, loan deficiencies and other “old friends” will be canceled in bankruptcy.  Good riddance.

+What is the Chapter 7 Bankruptcy Meeting of Creditors?

About a month after a Chapter 7 Bankruptcy is filed, you MUST attend the so-calledMeeting of Creditors. Creditors rarely show (go figure). In San Diego, the meeting is held at at the downtown United States Trustee‘s office. It’s not in court, there’s no judge, but the bankruptcy debtor testifies under oath. The meeting amounts to a very-brief interview with a chapter 7 bankruptcy Trustee. The trustee will confirm that you are you (i.e. check your ID and social security card), check for “excess” assets (excess rarely occurs) , and point to any inconsistency between your bankruptcy petition (filed with the court) and other documentary evidence. Your San Diego Bankruptcy Attorney is at your side to ensure your declarations and evidence match, and to ensure a sweat-free meeting (well, wear loose-fitting clothing anyway, in case the a/c’s on the fritz). Alas, Yours Truly must always wear his stupid “attorney uniform.” This is the sartorial burden of slacks, coat and tie in a San Diego summer.

+Can I file Chapter 7 Bankruptcy without my spouse?

Yes. If you’re married, you can elect to file Chapter 7 Bankruptcy with your spouse, or you can file without your spouse. However, in marriage, what is mine is yours. Your husband or wife’s income is presumed to count as your income. And your spouse’s property is presumed to count as your property (unless it qualifies as “separate property,” such as what your man or woman already had before marriage). Your San Diego Bankruptcy Attorney will advise you whether it makes sense to file with or without your spouse.

+Can I file Chapter 7 Bankruptcy if I filed bankruptcy before?

Yes. You can file Chapter 7 Bankruptcy again (and again). But, repeat chapter 7 filings are subject to wait periods. The following wait periods only apply if you filed bankruptcy before AND that prior bankruptcy ended in a discharge (which would mean you completed it successfully and canceled debt). To file chapter 7 bankruptcy again, it must at least 8 (eight) years since the filing date of a prior chapter 7 that ended in a discharge. And it must be 6 (six) years since the filing date of a prior chapter 13 that ended in a discharge ((or less if a high amount of debt was paid in that earlier chapter 13 bankruptcy). Again, these wait periods apply only if you received a discharge in the prior bankruptcy. If your prior case ended in a dismissal (or closed without resulting debt cancellation), then the above wait periods don’t apply (but there are other restrictions if you had prior cases open or pending within the last year).

+Can I Protect my Car and Home in Chapter 7 Bankruptcy?

Questions on cars and homes are among our most popular chapter 7 bankruptcy FAQs. The answer is: Yes (with rare exceptions).  In Chapter 7 Bankruptcy, a car or home can be sold to repay creditors, but only if they have “too much” equity (equity is market value less loan payoff).  However, most Chapter 7 Bankruptcy cases involve homes and vehicles with little equity.  If there’s no equity, then the asset won’t be sold in bankruptcy; it’s yours to keep as long as you pay off the mortgage or loan (just like if you did not file bankruptcy). Your San Diego Bankruptcy Attorney will immediately advise you if your car or home or subject to any risk.

+Can I Protect my Property in Chapter 7 Bankruptcy?

Yes. For San Diego residents (here for 2 years), you can protect from any loss (exempt) $5,350 in motor vehicle equity (value less loan payoff) AND stack on top of that or apply to other property value an “allowance” of $28,225. You can exempt $75,000 to $175,000 in home equity (if not protecting substantial personal property). Exceptions apply. Your San Diego Bankruptcy Attorney can advise you if you risk any loss of property (generally happens in a scanty 1% of chapter 7 bankruptcy cases).

+Do I make too much money for Chapter 7 bankruptcy?

A common misconception is that if you’re “above median income” in your state (the median is the halfway point: half the state earns below the median, half the state earns above it), then you can’t file Chapter 7 Bankruptcy. Wrong. You can have very high income and still file chapter 7 bankruptcy. This is as long as your necessary obligations (e.g. mortgage and car-loan debt, taxes, child care, etc.) fully offset your income. [Expensive tastes in textiles and pleasures don’t count as offsetting expenses.] If it’s in the cards, your San Diego Bankruptcy Attorney will show that you qualify for chapter 7 bankruptcy.

+CAN I file (qualify) for Chapter 7 Bankruptcy?

CAN I file (qualify) for Chapter 7 Bankruptcy? Most persons who seek our help DO qualify for Chapter 7 bankruptcy.

  • Chapter 7 Bankruptcy is available to persons whose income does not substantially exceed their income. Even if your income is above the “median” (meaning half the state earns more and half the state earns less), you can qualify for chapter 7 bankruptcy if your necessary obligations (including taxes, mortgage, car payments) fully offset your income.
  • If a person does have “too much” income for a chapter 7 bankruptcy, they can fileChapter 13 Bankruptcy, which lets them MANAGE their debt; they repay it over time, often for pennies on the dollar.
  • Chapter 7 bankruptcy filers almost always keep all their property.
  • If a chapter 7 debtor has “too much” property (e.g. more than $26,925 in cash or certain assets), then they may need to give SOME of it up. That’s not a bad deal if, for example, turning over a $5,000 tax refund means canceling $100,000 in debt. Your San Diego bankruptcy attorney will let you know ahead of time if you might possibly lose anything that way.
    • There is no explicit debt amount that’s required for chapter 7 bankruptcy.
    • To file chapter 7 bankruptcy, you need to wait 8 years from the time you had filed a prior chapter 7 (that ended in discharge or cancellation of debt), or 6 years from the time you had filed a prior chapter 13 (shorter if that chapter 13 paid off a very-high amount of debt).

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