Chapter 7: How Does It Work & How Long It Takes
Successfully filing Chapter 7 bankruptcy delivers many benefits that will help you make a new financial start in your life. However, in order to maximize your chances for a fruitful claim, you have to know more about how Chapter 7 bankruptcy works and how long the entire process can take. You should know the most important aspects of Chapter 7 bankruptcy. But keep in mind that a skilled Chapter 7 lawyer from San Diego will certainly make it easier for you to successfully file bankruptcy.
How does filing Chapter 7 work?
Chapter 7 bankruptcy is also known as liquidation or straight bankruptcy, and it is the most common type of bankruptcy for individuals. It can help you clear many different types of unsecured debts, granting you a fresh start and allowing you to bounce back from the financial difficulties you’ve been experiencing.
The process of filing Chapter 7 consists of several different stages that will lead you to a successful bankruptcy and ultimately rid you of unwanted debt.
- Analyzing debt: First, try to determine which debt you can discharge through bankruptcy. Start by creating a list of all of your accounts, the amount you owe to each and the monthly payment. A free copy of your credit report is available from annualcreditreport.com. Go ahead and get a report from each of the three credit agencies, Experian, Equifax and TransUnion. That way you can compare the information on all three and make a comprehensive list.
Another great way to help you plan for filing is to determine how much money you will save by filing. Add up each of your monthly payments so you know the total amount you pay each month.
This will also confirm you are making the right decision because with filing, you will no longer be spending hundreds or thousands of dollars and tons of interest servicing your debt each month.
- Determining property exemptions: Next, you need to make a list of all of your property. Make sure you include homes, land, cars, recreational vehicles, retirement accounts, savings, etc. Then, inquire about which property will be exempt in your Chapter 7 case.
In other words, find out what property you can keep and protect from the reach of creditors when you file. The most efficient method to confirm your property will be safe is to consult with a knowledgeable bankruptcy law firm. After all, you want to wipe out debt, not give up your assets.
- Ensuring eligibility: Before actually starting the process, you should know whether you’re eligible for Chapter 7 bankruptcy. Only then should you continue with the rest of the process. For example, do you pass the bankruptcy means test?
The means test is a complicated mathematical equation that requires you to calculate your monthly income from all sources. Then your court approved expenses are weighed against your income. Don’t be surprised if you feel like you are suddenly in your high school algebra class!
If you fail the means test, don’t lose hope. Experienced bankruptcy attorneys know the ropes when it comes to the means test and qualifying you for Chapter 7.
- Filling out forms: If you are eligible to file, it’s time to fill out all the necessary paperwork to the court. There are several forms required, starting with your bankruptcy petition. Make sure you have all of the required documents or your case might get dismissed by the court.
The forms mainly concern your debts, expenses, income, and any prior financial transactions covering the past six years. Oh and don’t forget you have to complete and file the means test.
- Attending a credit counseling course: All individuals who want to file bankruptcy have to attend a credit counseling course. Basically you can’t file a bankruptcy proceeding without your credit counseling certificate. And, make sure your certificate is still good when you file because they do expire.
- Filing your forms: When you’ve successfully filled out all the necessary documents, it’s time to file them with the court. You need to locate the bankruptcy court. Then, take all of your bankruptcy paperwork to the court so you can file it. Once it is filed, you will be given a specially assigned case number.
- Settling the fees: There is a fee you have to pay for filing your bankruptcy documentation. Make sure you have your filing fee with you when you head to the court. Alternatively, you can request to pay the fee in installments if you’re unable to pay it all at once. But to do this you need to file more documentation with the court.
Also, you can apply for a court waiver that will allow you to file the bankruptcy documents without paying any fees. Again, you need to file a motion with the court asking to waive your fees.
- Submitting documentation to a trustee: You will have to provide your trustee with the necessary documents that prove the accuracy of the information you’ve provided in your bankruptcy forms. Every bankruptcy division has different requirements so it is important you know what documents are required and when and how they need to be sent to the trustee.
- Attending a meeting: In all bankruptcy cases, both individuals and businesses need to attend a meeting with their assigned trustee. Sometimes, creditors will pop-up at the meeting to ask you questions. Although not creditors, representatives from the United States Trustee’s office can come to your meeting and ask questions.
- Handling secured debt: This is the portion of your bankruptcy case where you state how you would like to take care of your secured debts. Before the case is closed, you need to ensure you act according to these guidelines.
- Reaffirming or redeeming secured debts: When filing bankruptcy, you will be asked if you want to reaffirm, redeem, keep your existing contract or give up your property. Redemption is the process of securing a new loan that pays your creditor the replacement value of your property in a single lump sum.
Then you pay back the new lender. By comparison, reaffirming your loan means you agree to continue repaying your debt. The loan terms stay the same but you are giving up your right to discharge the debt through bankruptcy.
- Completing debtor education course: This is the second course you’re required to complete. Commonly referred to as the Financial Management Course, it must be finished and your certificate filed before your case closes.
Pay attention to submitting the certificate of completion on time, or else the court will close your case without granting you discharge. In that case, none of your debt will be forgiven and you are back where you started.
- Receiving discharge: Finally, the end of the process means you will receive your debt discharge and begin a new financial journey. Congratulations! You did it!
How long does filing Chapter 7 take?
Generally, the entire process of Chapter 7 bankruptcy, from the moment you file to the date of your debt discharge is anywhere from 3 to 4 months. However, the case can last longer than that in case a trustee demands that you submit additional documentation. In the worst case scenario your bankruptcy can stay open for an extended period of time to allow the trustee to take and sell your property to pay off your creditors. It is rare for the trustee to make people give up their property but it happens.
Which experienced Chapter 7 bankruptcy lawyer in San Diego should I contact?
If you’re thinking about filing Chapter 7 bankruptcy, you need to be familiar with the important details to make your claim successful. First, inquire about what you should never do before filing bankruptcy, and whether or not you actually qualify for Chapter 7. Only then is it time to start preparing for your meeting with a bankruptcy attorney in San Diego. But, which bankruptcy lawyer do you contact to help you out? There’s only one name that we can think of, and that’s Bankruptcy Law Offices of Mark L. Miller.
We’re a team of experienced and knowledgeable bankruptcy lawyers who know the ins and outs of bankruptcy law in the state of California. If there’s anything you need regarding bankruptcy, you can count on us to provide assistance from the very beginning to the end of your bankruptcy process. With our help, bankruptcy will turn out to be the best decision you made. We’re conveniently located near Old Town San Diego State Historic Park, so you should have no trouble finding us. Reach out to us today!