"Fresh Start" - Chapter 7
Chapter 7 is the quickest, easiest and most frequently filed form of bankruptcy in the United States. Commonly referred to as a "liquidation," a Chapter 7 bankruptcy allows a debtor to discharge, or get rid of, his legal obligation on virtually all debt while still retaining his property (home, cars, household furnishings, etc...). The legislative intent behind a Chapter 7 is to give the debtor a "FRESH START" by eliminating burdensome debt. To determine whether or not someone qualifies for a Chapter 7, the court examines a debtor's income after various allowable expenses are deducted by way of the "means test". In short, if the debtor has less income than allowable expenses each month, he or she will qualify for a Chapter 7 bankruptcy. When contacting an Orange County bankruptcy attorney you will discuss your financial situation with the attorney. Since the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) passed, there are also income limitations that apply to Chapter 7 bankruptcies. In essence, if you don't live extravagantly and you spend more than you make each month, you likely qualify for a Chapter 7 bankruptcy.
The Chapter 7 Timeline
In most Chapter 7 bankruptcy cases, your case is finalized and the court issues an order discharging your debts within 4-6 months from the date your action is filed in the federal bankruptcy court.
1. Provide Your Financial Information
You will need to locate, organize, and provide all the requested and necessary financial documents to us prior to the drafting of your bankruptcy petition. The documents needed will include your credit card statements, proof of income, tax returns, bank statements and mortgage statements.
2. Credit Counseling
The Bankruptcy Code now requires a consumer credit counseling class be taken prior to filing any personal bankruptcy case. The class can be taken on-line or over the telephone. We include the cost for this class in our retainer fee, and will provide you with instructions on how to complete the class and obtain your required certificate of completion.
3. Bankruptcy Petition is Prepared
The documents required to file your bankruptcy case ("petition") will be completed after all required documentation is received by our office from you in the format requested.
4. Sign/File the Bankruptcy Petition
Your case officially begins on the day we file your bankruptcy petition with the court. This is the day that the ‘automatic stay' (temporary injunction) goes into effect. It prevents ALL of your creditors from contacting you, harassing you or dunning you for payment in any way.
5. Bankruptcy Court Hearing
The next important date is approximately 45 days after the filing of your case. This is the 341(a) meeting of creditors with the court-appointed trustee. In most instances, creditors do not show up at this meeting. The purpose of the meeting is for the bankruptcy trustee to ask some basic questions about your case. We will be present with you at this meeting. You will be required to bring your social security card and a photo ID. If the trustee requests any additional documents, we will work with you to provide those documents.
6. Bankruptcy Discharge
You can generally expect to be discharged no more than 90 days after the meeting of creditors. The "discharge order" is the order signed by the bankruptcy court which prevents your creditors from ever attempting to collect the debts owed.