Chapter 7 bankruptcy offers a fresh start to people who find themselves buried in credit card debt, medical bills and other unsecured debt. In the bankruptcy, most of those debts are discharged, which means that you’re no longer legally obligated to pay them. It also means that creditors and debt collectors can’t contact you about those debts, report them as late to the credit bureaus or otherwise bother you about them.
Some of the most common types of debt discharged when filing chapter 7 bankruptcy include:
Immediate Relief from Financial Stress
One of the most powerful aspects of consumer bankruptcy is the automatic stay. In most cases, the automatic stay stops creditor calls, debt collection letters, law suits and even wage garnishments as soon as your bankruptcy case is filed.
That means that when you get the right help, the pressure could be off in as little as a few days.
Chapter 7 bankruptcy is designed to help people crippled by unsecured debt wipe the slate clean and begin again on a more solid footing.
Your attorney will prepare petitions and schedules that detail your income, debts and assets for the bankruptcy court.
The court will appoint a bankruptcy trustee to oversee your case. The trustee’s primary job is to make sure that any available assets are distributed to your creditors, but most Chapter 7 filers keep all of their property. That’s because some property is exempt, meaning that it’s safe from creditors.
Exemptions vary somewhat from state to state, but they typically include things like:
In some states, there is also a “wild card” exemption which allows you to protect some property that might otherwise not be exempt.
Creditors have up to 60 days to object to discharge. A discharge may be entered at any point after that 60-day period expires, assuming that you have completed the required Personal Financial Management Course. Often, the entire Chapter 7 bankruptcy case is completed in as little as four months. The discharge acts as an injunction, barring creditors and debt collectors from pursuing payment of discharged debt.
The bankruptcy discharge is intended to provide people like you with a fresh financial start. Obviously, you can’t make the most of that fresh start if creditors continue to harass you or discharged debt is still appearing on your credit report.
When a creditor or debt collector violates the discharge injunction, we can reopen the bankruptcy case to request sanctions. Sometimes, the creditor will even be ordered to pay you money for violating the discharge.
Many bankruptcy law firms consider their work done when the discharge is entered, but we know that you need continuing protection. That’s why we offer a free post-discharge audit of your credit report and take quick action against any creditor who is jeopardizing your fresh start with illegal collection activity or inaccurate credit reporting. UpRight Law is representing consumers across the country in assuring they receive the fresh start bankruptcy intended for them.
Of course, the law is only intended to help those who truly can’t repay their debts. To file for Chapter 7 bankruptcy and receive a discharge, you must qualify under a financial analysis known as the means test.
The actual means test calculation can be complicated, and your bankruptcy lawyer is the best source of specific information. This short overview will give you an idea of what to expect.
First, compare your income with the median income in your state for a household of your size. If your income is below the median, you are probably eligible for Chapter 7 bankruptcy.
If your income is above the median, that doesn’t necessarily mean that you can’t file for Chapter 7. The next step is to subtract certain allowed expenses from your income to find “disposable income”. If your disposable income over the next five years is less than $6,000 ($1,250/year), you can probably file for Chapter 7 bankruptcy. If that number is greater than $10,000, you probably cannot.
In the gray area between $6,000 and $10,000, a more complex calculation takes place, comparing your disposable income with the balance of your unsecured, non-priority debts.
In tough economic times, many solo and small firm attorneys are branching out into bankruptcy law in an effort to increase business. Unfortunately, some of those attorneys don’t have the experience necessary to offer you the full protection available under U.S. bankruptcy and consumer protection laws. Over the past 30 years, the partners in our firm have successfully represented more than 100,000 consumers in bankruptcy matters.
In addition to that experience, we offer our clients top-notch, personal service and a holistic approach that begins with an assessment of your specific circumstances and doesn’t end until you’re on the path to a 720 credit score and a brighter future.
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