Going through financial hardship is never easy, especially in our present day. For some people, incurring debt is the only way to keep their head above water. In some instances, an unexpected accident or illness can put any person under extreme financial duress. No matter the circumstances surrounding your financial situation, the results can be severe. Unfortunately, falling behind on your mortgage payments, your credit card payments, and other obligations can put you at financial risk. However, bankruptcy may be able to provide a solution to your financial problems. Our Roseville Chapter 7 bankruptcy lawyers invite you to read on to learn more about Chapter 7 bankruptcy benefits.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is the most used form of bankruptcy in the United States. According to the United States Courts, there were more than 8 million Chapter 7 filings from 2006 to 2017. Also known as “liquidation bankruptcy,” Chapter 7 allows you to wipe out debts, while offering exemptions that can protect property.
Qualifying for Chapter 7 Bankruptcy
People looking to file Chapter 7 bankruptcy in California must meet specific prerequisites before the filing process can begin. Some of the requirements include, but are not limited to:
- Means testing
- Credit counseling
- Financial documentation
Chapter 7 Means Test
The means test is an essential prerequisite in a Chapter 7 case. For means testing, you will undergo a financial examination to determine if you have the “means” to pay back your debt. The means test will evaluate your disposable income and compare it to California’s median income to decide whether or not you are eligible for Chapter 7. The result of the means test will let you know if you can file for Chapter 7, or if you should consider another option, like a Chapter 13 bankruptcy. An experienced Chapter 7 bankruptcy lawyer can help you understand how to complete means testing and what the results could mean for your case.
Bankruptcy Credit Counseling
As part of your Chapter 7 filing, you must attend a credit counseling program that must be provided by a government-approved agency. During credit counseling, you will receive a thorough assessment of your financial situation. Though bankruptcy law makes participation mandatory, this does not mean you should disregard information the agency provides. If you still intend to file bankruptcy after credit counseling, you should talk to a Chapter 7 attorney about the right way to proceed.
To proceed with a Chapter 7 filing, you must gather and provide various documentation related to your finances. For example, you will need financial documents such as pay stubs, credit card statements, bank statements, mortgage statements, tax returns, and other records. Your bankruptcy lawyer can help you understand and fulfill your responsibilities when it comes to providing financial information about your debts, assets, and income. Be advised that failing to present accurate and truthful information can lead to severe legal consequences.
What Are the Benefits of Chapter 7?
A Chapter 7 bankruptcy may be able to offer a fresh financial start if you are facing difficulties with debt. Some of the benefits you could reap from a Chapter 7 bankruptcy include:
- Getting rid of debt quickly
- Pausing debt collection actions
- Starting over financially
Chapter 7 Debt Discharge
Chapter 7 wipes out, or “discharges,” many types of “unsecured” debts. Unsecured debts are debts which are not “secured” by assets, property, or other collateral. Examples of unsecured debts that are discharged in Chapter 7 include credit card debts and medical debts.
Keep in mind that not all debts are dischargeable in a Chapter 7 bankruptcy. Liabilities such as student loans, child support, alimony, and others will remain with you. However, there are rare exceptions where student debt can potentially be discharged if it causes “undue hardship.”
The Automatic Stay
The automatic stay is a form of injunction (court order) that bars creditors – with certain exceptions – from collecting certain debts. This injunction activates the moment you file a bankruptcy petition.
As an exception to the automatic stay, you cannot stop creditors from collecting debt such as child support, among others. Additionally, if a creditor thinks the automatic stay is not serving its intended purpose, they could file a motion attempting to lift the order.
Fastest Bankruptcy Process
One of the reasons people often consider Chapter 7 bankruptcy is its quick resolution. In many cases, Chapter 7 takes about four to six months. Discharging debt in such a short amount of time not only brings peace of mind – but also the opportunity to start again financially.
Roseville Bankruptcy Lawyers Can Help You File Chapter 7 in California
If you are facing financial difficulties and do not know where to turn, call our Roseville bankruptcy lawyers today. You may be able to get debt relief or delay foreclosure by filing for Chapter 7 in California. To discuss your situation in a free consultation, call The Bankruptcy Group today at (800) 920-5351, or contact us online.