Bankruptcy

This is the most common type of bankruptcy, especially for consumers! This process involves a liquidation which will have all your debts ERASED!. 

During the process, a trustee is appointed and they will collect and sell all of your non-exempt assets.  

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When the trustee sells the assets they are responsible for distributing the assets to you (for any amount exempted), the creditors, and a commission to themselves. 

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Once this happens your attorney will take it from there, you will have to attend a hearing (remote at the moment) and your debts will be clear! 

Chapter 7: a liquidation solution that eliminates most unsecured debts such as credit cards and medical expenses. Bankruptcy reform has called for more qualifications before an applicant can apply for chapter 7 bankruptcy, but we do our best to ensure our clients are able to proceed! 

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Chapter 13: restructures your debt rather than erasing it. Chapter 13 requires that you pay a portion of that debt over the life of the bankruptcy. 

1. Protection against collection efforts, wage garnishment, foreclosure, eviction, and utility shut-off. 

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2. From the date of filing on, moneys earned and assets acquired are not subject to the bankruptcy. 

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3. Clean slate except for secured debts which are not dischargeable in bankruptcy. Find a list of examples of secured debts HERE. 

Qualifying for Chapter 7 involves a means test that considers your income and expenses. If your income falls below the median for your household size in your state, you likely qualify. However, even with higher income, you might still qualify if your expenses are high enough.

Chapter 7 eliminates most unsecured debts, such as credit card debt, medical bills, and personal loans. 

1. Secured Debts: If you want to keep the property securing a loan (like a car or house), you'll need to continue making payments or surrender the property. Chapter 7 won't eliminate the debt itself.

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2. Priority Debts: These are court-ordered obligations that must be paid before unsecured debts. Examples include child support, alimony, certain tax debts (recent income taxes, student loan taxes), and court-ordered restitution.

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3. Student Loans: Generally, student loans cannot be discharged in Chapter 7 bankruptcy. There are very limited exceptions based on extreme hardship, but these are difficult to qualify for.

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4. Debts Obtained Through Fraud: If you borrowed money through fraudulent means, the debt likely won't be discharged.

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5. DUI-Related Fines and Restitution: Debts arising from driving under the influence, such as fines or restitution to victims, typically cannot be discharged.

Filing for Chapter 7 bankruptcy will negatively impact your credit score, potentially dropping it significantly. However, the impact lessens over time, and you can rebuild your credit score with responsible financial management practices.

You'll typically need financial documents like income tax returns, pay stubs, bank statements, and a list of creditors and debts. A bankruptcy attorney can advise you on the specific documents required in your case.

The meeting is an opportunity for creditors to ask questions about your finances. You'll be present with your attorney to answer questions and clarify your financial situation.

Steps to rebuild credit include making on-time payments for all remaining debts, obtaining a secured credit card and using it responsibly, and monitoring your credit report for errors.

There are waiting periods before filing again. Generally, you must wait eight years to file another Chapter 7 petition.