Bankruptcy - Chapter 7

What is a Bankruptcy and When Should I Consider filing?

Chapter 7, otherwise known as "liquidation" or "straight bankruptcy" is generally the simplest and quickest bankruptcy. The purpose of chapter 7 bankruptcy is to discharge debts and give the debtor a "fresh start". Most chapter 7 cases result in a discharge of all debts. Chapter 7 Bankruptcy may be the solution for you if your income has decreased, been laid-off, you are unable to meet your household needs or pay your bills.

Bankruptcy may make it possible for you to:

• Eliminate debts by “discharging” your legal obligation to pay outstanding bills (i.e. credit cards, lines of credits, repossessed cars, charge accounts, etc.)
• Stop the foreclosure of your home
• Prevent repossession of a car or other property, or force the creditor to return property even after it has been repossessed.
• Stop wage garnishment and harassing debt collectors from calling
• Restore or prevent termination of utility service.

Will I Lose my Car, House or Household Furnishings?

In many cases, filing for bankruptcy protects your house, car, cash, jewelry, retirement accounts and other assets from creditors seeking repayment on loans or other debts by “Exempting” the assets. Most chapter 7 cases are "no-asset" cases, which means that you don't have non-exempt property for the appointed trustee to sell for the benefit of creditors. You're able to keep any "exempt" property.

Exempt property may consist of the following:

• Real estate such as a residence (with or without equity)
• Cars (with loans or fully paid-off)
• Social security, veteran's benefits, disability, illness or unemployment benefits
• Proceeds from a judgment
• Cash, jewelry
• Household Good & Furnishings (Furniture, electronics, computers, clothing)

Eligibility for Chapter 7 in San Diego, California

If you file, under BAPCPA, you must undergo a "means test" to qualify for Chapter 7 bankruptcy in San Diego, California. This Your income and expenses are examined to see how they compare to the standard for your area as set by the IRS.

For example, if you earn less than the median income for a family of your size in your state, you can file for Chapter 7. However, if your income from the last six months is greater than the median income, and you can pay at least $6,000 over five years or $100 a month, toward your debt you can't file for Chapter 7. You must file for Chapter 13 instead.

The means testing requires you to file any past due tax returns within weeks of filing bankruptcy.

Now, you must also pay for credit counseling and budget analysis at your own expense. This will address the means testing calculations for you. These calculators can also be found on the Internet.

Filing Chapter 7 in San Diego, California

Bankruptcy starts with filing an official petition, schedules and Statement of Financial Affairs in court. You must provide:

• A full list of creditors
• The amount and type of their claim, the source, amount and frequency of your income
• A list of all your property
• A detailed list of monthly living expenses

As soon as you file for bankruptcy, creditors are prevented from trying to collect on your debts through an "automatic stay." The stay preserves your property and gives you a break from being sued.

Creditors must show the judge there is cause to continue with collection action. For instance, by showing the property might deteriorate in value during the bankruptcy period.

If there is nonexempt property, the trustee will control of it. That person will sell the property and pay administration fees and then pay any remaining money to creditors with active and approved claims. These will be paid in a level of priority. Any wages earned after filing, you keep and are beyond the reach of creditors prior to the filing date.