Providing Orange County Clients a Path Toward Financial Freedom
If you’re an individual or business owner in a difficult financial situation with a considerable amount of debt to deal with, undergoing Chapter 7 bankruptcy can free you from the burden caused by most unsecured debts. You may have fallen behind on credit card payments, been hit large medical bills, or your company needs to redistribute money to pay priority debts such as taxes. In any of these cases and more, Chapter 7 can help you diminish or even eliminate your obligation to pay these debts.
What Is Chapter 7?
Chapter 7 is the most common form of bankruptcy used in the United States. Available to most individuals and businesses in Orange County, Chapter 7 is also often referred to as “liquidation bankruptcy” because nonexempt property and assets in a debtor’s estate are sold off. The proceeds from a bankruptcy sale are then used to pay creditors and satisfy the debtor’s obligation.
While this is what happens in theory, in many cases it’s possible that all property someone owns can be exempted from seizure and sale. This means the debtor can eject unsecured debt without losing household appliances, jewelry, family heirlooms, and whatever else they may value. An experienced Chapter 7 attorney may be able to help you win such a “no-asset” case or help you keep what’s most important to you should your creditors force a seizure and sale of your property.
“I went to the financial law center in July 2018, I met with Darren DiMarco initially, then I met with Andy Warshaw. This law center helped me tremendously when I had nowhere else to turn!”- Timothy W.
Can All of My Debt Go Away?
Not all of your debt will clear in Chapter 7, but most of it can. If you owe a considerable about of unsecured debt – money owed that’s not secured by collateral – most of it can be discharged during bankruptcy.
Common types of unsecured debt include:
- Credit card debt
- Personal loans
- Medical bills
- Utility bills
- Back rent
- Government benefit overpayments
Secured debt, then, is property secured by collateral such as a vehicle or house. Your creditor can seek repayment by repossessing the property or placing a lien against it if you’re behind on payments. If you are up to date on payments for these things but have little or no equity in them yet, your other creditors cannot seek to claim them as payment.
How Do I Qualify for Chapter 7?
Qualifying for this type of bankruptcy is less about what you owe in overall debt and more about other aspects of your life, such as income, family size, and how much secured debt and arrears are tied to you.
You will first undergo a “means test” to determine whether or not your household’s income is below California’s median income. Documentation going back at least six months is also required and should account for expenses such as your mortgage payments, groceries, clothing, medical costs, and other “allowable” expenses. Other expenses are considered disposable income that could be put toward paying off your debt.
If you pass the means test, you’re cleared to file for Chapter 7 in Orange County. If you fail the means test, you may undergo the process again in six months if you think your situation would change enough to pass.
What is the Means Test?
In order to qualify for Chapter 7, you must pass the means test. It was designed to restrict the number of people who could have their debts forgiven. The test calculates whether or not you have enough disposable income to repay your debts while being able to continue living comfortably. This means that there should be enough monthly income to pay off a part of your debt after specific expenses are subtracted. The test takes a look at your income, expenses, and the size of your family.
How Long Does Chapter 7 Bankruptcy Take?
It can take between 4 to 6 months from your initial filing in order to discharge your debt via Chapter 7. At Financial Relief Law Center, APC, our team is prepared to walk you through each step of the process!
As soon as your petition is filed, an "automatic stay" is issued by the bankruptcy court, which will stop creditors from coming after you. This means, no more lawsuits, phone calls, or wage garnishments. If your bankruptcy trustee is satisfied by your filing, then you can be confident that your debt is eligible for discharge. It may take longer if the trustee needs to ask you to submit additional documents or it is necessary for property to be sold to repay the creditors.
Bankruptcy can be an intimidating, but it’s important to recognize that it can also be an important tool to clear the foundation for a better and more stable financial situation. If you need support, reach out to the bankruptcy attorneys at Financial Relief Law Center, APC for help.
Get Help from Financial Relief Law Center, APC
If you’re considering Chapter 7 to free yourself from overwhelming debt, consult with our Irvine bankruptcy attorneys for help. We emphasize working with individuals and corporations on a personal level to build a legal strategy that helps you get the most out of your bankruptcy case. You can expect to be treated by our attorneys with compassion through the process as we work together to help you achieve your goals.
For a free consultation, contact us online and tell us you’re interested in meeting with one of our attorneys to discuss your options in Chapter 7. We serve businesses & individuals in Irvine.
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