Chapter 7 Bankruptcy

When financial hardships make paying your regular monthly bills impossible, each day can be a challenge. Many people in this situation live in fear of a ringing telephone or the notice of a lawsuit from some debt collection agency. The abuse that debt collectors can dish out can be brutal, and things like wage garnishment can make your financial situation even worse. Fortunately, you may be able to find some relief through a process called Chapter 7 bankruptcy.

If you truly need a fresh financial start, we can help. At Gulf Coast Bankruptcy Attorney, our goal is to represent the interests of individuals and businesses who are struggling with debt. To learn more about filing for Chapter 7 bankruptcy, contact us today to schedule a free consultation.

Advantages of Chapter 7 Bankruptcy

Millions of Americans are able to secure freedom from crippling debt each year by filing for Chapter 7 bankruptcy. Trying to overcome financial difficulty on your own can be tough, but the law provides a solution. Some of the benefits of Chapter 7 bankruptcy include:

• Debt forgiveness– Chapter 7 bankruptcy allows you to discharge much of your debt. You can get rid of debts like credit card balances, medical bills, personal loans, and other types of unsecured debt.
• Relief from creditor harassment– When you file for Chapter 7 bankruptcy, the judge issues an “automatic stay,” which forces creditors to stop contacting you about debt repayment and cease trying to repossess your property or garnish your wages.
• Help with your home– While Chapter 7 won’t erase your mortgage, it can give you some time to get your finances under control so that you can avoid foreclosure.
• Rebuild your credit– Any type of bankruptcy will damage your credit score, but you can immediately begin rebuilding your credit once your case is complete.
• Quick resolution– Unlike other types of bankruptcy that might take years to resolve, Chapter 7 cases can be done in around six months.

When you speak with a skilled bankruptcy attorney about your options, you can better understand these and other benefits of using the bankruptcy laws to address your unique situation.

Chapter 7 Eligibility

If you plan to file for Chapter 7 bankruptcy, you must qualify first. Prior to 2005, bankruptcy judges could largely make this determination. Consequently, many people filed for a liquidation bankruptcy when they were still capable of repaying a majority of their debts. Now, you must meet certain requirements:

1. Income Level

There is a “means test” to determine eligibility for Chapter 7 bankruptcy. First, you should determine if your current monthly income is below the state’s median income. If it is lower, you pass the means test. If it is higher, you can deduct certain monthly expenses to get a disposable income figure. What you can deduct will vary by state and region, so it’s a good idea to speak with an attorney about your eligibility.

2. Ability to Pay

If you have no financial means to repay your outstanding debt, you may qualify for Chapter 7. Note: you must still pass the means test outlined above.

3. Previous Bankruptcies

As long as it has been more than eight years since you last discharged debt under a Chapter 7 bankruptcy or over six years for a Chapter 13 bankruptcy, then you are eligible to file. But you will not be eligible if you have had a previous Chapter 7 or 13 bankruptcy dismissed in the past 180 days due to fraud or the violation of a court order.

4. Previous Fraud

You will not be eligible to file for Chapter 7 bankruptcy if the court finds that you attempted to defraud creditors by transferring property to friends or family, purchasing luxury items, lying about income or debt, or damaging or destroying property.

Chapter 7 Exemptions

Many people fear filing for bankruptcy because they believe they will need to sell their home, vehicle, or other property. In some cases, this is required. But the purpose of bankruptcy isn’t to make you homeless or take away your primary means of transportation. The bankruptcy code provides certain exemptions, meaning there are limits on the assets you will be able to keep.

The federal bankruptcy code has established a list of exemptions, but each state can change them at its discretion. For example, in Mississippi, your home is protected up to $75,000 in equity, as are your household goods and vehicle up to $10,000 in value. In Alabama, you can protect up to $15,000 in home equity and $7,750 in personal property. In Louisiana, the homestead exemption is $35,000, and the motor vehicle exemption is $7,500.

Exemptions in bankruptcy can be complex. There are a lot of potential ways to safeguard your property and savings, which is why we recommend you speak with us before moving forward.

Chapter 7 Bankruptcy Process

Once you and your attorney have determined that you qualify for Chapter 7 bankruptcy, you will begin gathering the necessary documentation to file along with your petition. Federal law now requires that you attend mandatory credit counseling and a financial management course as part of the bankruptcy process. If you fail to meet this requirement, your case is likely going to be dismissed.

When your attorney files your bankruptcy documents with the court, you’ll be assigned a case number. This is also when an injunction goes into effect that stops further actions from creditors.

About one month after your case is filed, there will be a mandatory meeting, called a “341(a) Meeting” that includes the trustee and any creditors that wish to appear. The trustee outlines how any debts will be repaid or discharged.

Creditors have 60 days to file an objection to the discharge of any debts. If no one objects, the court will usually sign a Notice of Discharge soon after, and the process is complete.

Speak an Experienced Gulf Coast Chapter 7 Bankruptcy Attorney

If you’re stuck with overwhelming debt, there is a way out. Chapter 7 bankruptcy can give you the fresh financial start you need and deserve. But, without a thorough understanding of how the law and this process works, you may not get the results you want. To find out whether Chapter 7 bankruptcy is right for you or to move forward and get immediate relief from harassing creditors, contact Gulf Coast Bankruptcy Attorney today and we can recommend an experienced Certified Bankruptcy Attorney to assist you through the process.