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Chapter 7 BankruptcyLa Mesa 91941, la Mesa 91942, La Mesa 91943, La Mesa 91944Overview of Chapter 7 Bankruptcy and How It Works.
Chapter 7 - How Chapter 7 Works, Overview of Chapter 7 Bankruptcy, La Mesa CA Free Chapter 7 Consultation | Bankruptcy Attorney | La Mesa, CA Liquidation of NON-EXEMPT Property Under The Bankruptcy Code Chapter 7 of the Bankruptcy Code provides for "liquidation," ( i.e., the sale of a debtor's nonexempt property and the distribution of the proceeds to creditors). The good news is that most people can keep their car, their home and other assets since most are exempt to a certain point. (California exempt assets- click here) Background On Chapter 7 Bankruptcy - Overview of the Process A chapter 7 bankruptcy case does not involve the filing of a plan of repayment as in chapter 13. This is why chapter 7 attorney fees are normally lower than a 13 filing. Instead, the bankruptcy trustee gathers and sells the debtor's nonexempt assets and uses the proceeds of such assets to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code. Part of the debtor's property may be subject to liens and mortgages that pledge the property to other creditors. In addition, the Bankruptcy Code will allow the debtor to keep certain "exempt" property; but a trustee will liquidate the debtor's remaining non- exempt assets. If you retain me as your attorney I will tell you in advance of what property you may be at risk of losing and what property appears to be exempt. Even if you qualify for chapter 7 this may not be your best option based on all of the information you provide my office during our pre-bankruptcy review. Some other law offices don’t do them. It does NOT add to your over all cost of fees paid to my office. Review of the Chapter 7 bankruptcy process. Learn about the Chapter 7 process before filing. Call about Pre-filing bankruptcy. Bankruptcy La Mesa, CA 619 447-6780 Chapter 7 Eligibility - Can you Qualify for Chapter 7? To qualify for relief under chapter 7 of the Bankruptcy Code, the debtor may be an individual, married couple filing a joint petition, a partnership, or other business entity. They are subject to the means test described above for individual debtors, relief is available under chapter 7 irrespective of the amount of the debtor's debts or whether the debtor is solvent or insolvent. PRIOR CASE DISMISSED WITHIN THE LAST 180 DAYS BEFORE FILING. An individual cannot file under chapter 7 or any other chapter including a chapter 13, if during the preceding 180 days a prior bankruptcy, the prior petition was dismissed due to the debtor's willful failure to appear before the court, comply with orders of the court, or the debtor voluntarily dismissed the previous case after creditors sought relief from the bankruptcy court to recover property upon which they hold liens. How Chapter 7 Works, Overview of Chapter 7 Bankruptcy, La Mesa CA You Must Complete Your Credit Counseling Class BEFORE FILING. In addition, no individual may be a debtor under chapter 7 or any chapter of the Bankruptcy Code unless he or she has, within 180 days before filing, received credit counseling from an approved credit counseling agency either in an individual or group briefing. Exceptions to the credit counseling classes before filing. There are exceptions in emergency situations or where the U.S. trustee (or bankruptcy administrator) has determined that there are insufficient approved agencies to provide the required counseling. It is beneficial to get it taken as soon as possible and have it forwarded to my law office. If you complete the course online, print out a copy for your record then forward it to my office. If the counseling results in a debt management plan by the credit counseling agency, it must be filed with the court. This does not automatically exclude you from filing chapter 7. One of the primary purposes of bankruptcy is to discharge certain debts in order to give an honest individual debtor a "fresh start." Most of the people who came to me for bankruptcy representation, slowly got to the point when they just needed debt relief. They experienced a sudden change of circumstances that forced them into debt quickly which had a devastating effect upon their ability to pay. Also, in the last year a lot of credit card companies changed their minimum payment amount. This forced many people to file for bankruptcy. The interest rate soared to an extremely high amount along with additional late fees and over limit fees. The debtor has no liability for discharged debts. In a chapter 7 case, however, a discharge is only available to individual debtors, not to partnerships or corporations. 11 U.S.C. § 727(a)(1). Although an individual chapter 7 case usually results in a discharge of debts, the right to a discharge is not absolute, and some types of debts are not discharged. (For a list of debts that are not dischargeable click here). Moreover, a bankruptcy discharge does not extinguish a lien on property. How Chapter 7 Works - Overview of Chapter 7 A quick review how a chapter 7 bankruptcy works. A chapter 7 case begins with the debtor filing a petition with the bankruptcy court serving the area where the individual lives or where the business debtor is organized or has its principal place of business or principal assets. In addition to the petition, the debtor must also file with the court: (1) schedules of assets and liabilities; (2) a schedule of current income and expenditures; (3) a statement of financial affairs; and (4) a schedule of executory contracts and unexpired leases. You must also provide the assigned case trustee with a copy of the tax return or transcripts for the most recent tax year as well as tax returns filed during the case (including tax returns for prior years that had not been filed when the case began). Individual debtors with primary consumer debts have additional document filing requirements. You also must file: a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling; You must also provided evidence of payment from employers, if any, received 60 days before filing; A statement of monthly net income and any anticipated increase in income or expenses after filing; And a record of any interest the debtor has in federal or state qualified education or tuition accounts. It is also important to understand that even if filing jointly, a husband and wife are subject to all the document filing requirements of individual debtors. So both husband and wife must both complete the filing requirements if filing a joint petition. Currently the courts filing fees are $245 case filing fee, a $39 miscellaneous administrative fee, and a $15 trustee surcharge. Normally, the fees must be paid to the clerk of the court upon filing. You can get permission of the court to make payment but I would suggest to make the payment upon filing. Also your case can be dismissed if the fee is not paid, plus you would have to pay an extra $39 administrative fee and the $15 trustee surcharge in installments. If a joint petition is filed, only one filing fee, one administrative fee, and one trustee surcharge is charged. Debtors should be aware that failure to pay these fees probably will result in dismissal of the case. 11 U.S.C. § 707(a). If you retained the law office of David A. Casey to prepare your bankruptcy filing we complete the official bankruptcy forms that make up the petition, statement of financial affairs, and schedules. These forms provide the following information: 1. A list of all creditors and the amount and nature of their claims; 2. The source, amount, and frequency of the debtor's income; 3. A list of all of the debtor's property; and 4. A detailed list of the debtor's monthly living expenses, i.e., food, clothing, shelter, utilities, taxes, transportation, medicine, and much more. . Married individuals must gather this information for their spouse regardless of whether they are filing a joint petition, separate individual petitions, or even if only one spouse is filing. In a situation where only one spouse files, the income and expenses of the non-filing spouse is required so that the court, the trustee and creditors can evaluate the household's financial position. One important schedule that an individual debtor will file is a schedule of "exempt" property. The Bankruptcy Code allows an individual debtor to protect some property from the claims of creditors because it is exempt under bankruptcy law or under the laws of the debtor's home state. California has two sets of exemptions. California has taken advantage of a provision in the Bankruptcy Code that permits each state to adopt its own exemption law in place of the federal exemptions. My office will review your property list and tell you what property is exempt. If you are reading this web site and live in another state other than California, I would suggest you consult an attorney to determine the exemptions available in your state where you live. AUTOMATIC STAY CHAPTER 7 - How Chapter 7 Stay Works. Filing a petition under chapter 7 "automatically stays" (stops) most collection actions against the debtor or the debtor's property. 11 U.S.C. § 362. But filing the petition does not stay certain types of actions listed under 11 U.S.C. § 362(b), and the stay may be effective only for a short time in some situations. The stay arises by operation of law and requires no judicial action. As long as the stay is in effect, creditors generally may not initiate or continue lawsuits, wage garnishments, or even telephone calls demanding payments. The bankruptcy clerk will give notice of the bankruptcy case to all creditors whose names and addresses are provided by the debtor. This is way we make sure you give us all of the creditors names and addresses. We also then cross reference them with your credit report. MEETING OF THE CREDITORS - Also Called the 341 Meeting Between 20 and 40 days after the petition is filed, the case trustee will hold a meeting of creditors. This is also called a 341 meeting. During this meeting, the trustee puts the debtor under oath, and both the trustee and creditors may ask questions. A debtor MUST ATTEND the meeting of the creditors and answer questions regarding the debtor's financial affairs and property. If a husband and wife have filed a joint petition, they both must attend the creditors' meeting and answer questions. Within 10 days of the creditors' meeting, the U.S. trustee will report to the court whether the case should be presumed to be an abuse under the means test described in 11 U.S.C. § 704(b). If you have been completely honest and have provided all of the facts and information regarding your assets and debts, you should not have anything to worry about. This is why it is so important to provide accurate debt and financial information before filing. It is also important for the debtor to cooperate with the trustee and to provide any financial records or documents that the trustee requests. The Bankruptcy Code requires the trustee to ask the debtor questions at the meeting of creditors to ensure that the debtor is aware of the potential consequences of seeking a discharge in bankruptcy such as the effect on credit history, the ability to file a petition under a different chapter, the effect of receiving a discharge, and the effect of reaffirming a debt. Some trustees provide written information on these topics at or before the meeting to ensure that the debtor is aware of this information. In order to preserve their independent judgment, bankruptcy judges are prohibited from attending the meeting of creditors. But don’t think the trustee is just another person. They have a lot of power and can make a bankruptcy difficult if they suspect something may not be right. Sometimes the trustee will file a motion because they have concerns. That does not mean your case is in danger only that their review has caused them some concerns. Again, if you have been honest most of the time we can answer the adversary proceeding without much of a problem.
CONVERT TO ANOTHER CHAPTER OTHER THAN CHAPTER 7 In order to accord the debtor complete relief, the Bankruptcy Code allows the debtor to convert a chapter 7 case to case under chapter 11, 12 or 13 as long as the debtor is eligible to be a debtor under the new chapter. However, a condition of the debtor's voluntary conversion is that the case has not previously been converted to chapter 7 from another chapter. Thus, the debtor will not be permitted to convert the case repeatedly from one chapter to another. Role of the Case Trustee When a chapter 7 petition is filed, the U.S. trustee appoints an impartial case trustee to administer the case and liquidate the debtor's nonexempt assets. If all the debtor's assets are exempt or subject to valid liens, the trustee will normally file a "no asset" report with the court, and there will be no distribution to unsecured creditors. Most chapter 7 cases involving individual debtors are no asset cases. But if the case appears to be an "asset" case at the outset, unsecured creditors must file their claims with the court within 90 days after the first date set for the meeting of creditors. Fed. R. Bankr. P. 3002(c). A governmental unit, however, has 180 days from the date the case is filed to file a claim. In the typical no asset chapter 7 case, there is no need for creditors to file proofs of claim because there will be no distribution. If the trustee later recovers assets for distribution to unsecured creditors, the Bankruptcy Court will provide notice to creditors and will allow additional time to file proofs of claim. Although a secured creditor does not need to file a proof of claim in a chapter 7 case to preserve its security interest or lien, there may be other reasons to file a claim. Sometimes a creditor in a chapter 7 case who has a lien on the debtor's property will consult an attorney for advice and a claim may be filed or an adversary proceeding may be filed against the debtor. This is one reason you should retain an attorney for your bankruptcy. Bankruptcy Creates an “ESTATE” Commencement of a bankruptcy case creates an "estate." The estate technically becomes the temporary legal owner of all the debtor's property. It consists of all legal or equitable interests of the debtor in property as of the commencement of the case, including property owned or held by another person if the debtor has an interest in the property. Normally the debtor's creditors are paid from nonexempt property of the estate in an assets case. The primary role of a chapter 7 trustee in an asset case is to liquidate the debtor's nonexempt assets in a manner that maximizes the return to the debtor's unsecured creditors. The trustee accomplishes this by selling the debtor's property if it is free and clear of liens (as long as the property is not exempt) or if it is worth more than any security interest or lien attached to the property and any exemption that the debtor holds in the property. How else can the trustee recover money or property? The trustee may also attempt to recover money or property under the trustee's "avoiding powers." The trustee's avoiding powers include the power to: set aside preferential transfers made to creditors within 90 days before the petition; undo security interests and other preposition transfers of property that were not properly perfected under nonbankruptcy law at the time of the petition; and pursue nonbankruptcy claims such as fraudulent conveyance and bulk transfer remedies available under state law. In addition, if the debtor is a business, the bankruptcy court may authorize the trustee to operate the business for a limited period of time, if such operation will benefit creditors and enhance the liquidation of the estate. 11 U.S.C. § 721. As you can see the bankruptcy can get complex very quickly. Section 726 of the Bankruptcy Code governs the distribution of the property of the estate. There are six classes of claims; and each class must be paid in full before the next lower class is paid anything. The debtor is only paid if all other classes of claims have been paid in full. Accordingly, the debtor is not particularly interested in the trustee's disposition of the estate assets, except with respect to the payment of those debts which for some reason are not dischargeable in the bankruptcy case. The individual debtor's primary concerns in a chapter 7 case are to retain exempt property and to receive a discharge that covers as many debts as possible. The Chapter 7 Discharge - Chapter 7 Gives You a Fresh Start A discharge releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor. A chapter 7 discharge is subject to many exceptions. This is why it is so important that the debtors consult a bankruptcy law office such as David A. Casey before filing. I will not only prepare the documents but will handle all aspects of your bankruptcy. Generally speaking as a bankruptcy attorney, excluding cases that are dismissed or converted for one reason or another, individual debtors receive a discharge in more than 99 percent of chapter 7 cases. If you give me all of the facts, we should not have any substantial problems. In most cases, unless a party files a complaint objecting to the discharge or a motion to extend the time to object, the bankruptcy court will issue a discharge order relatively early in the case – generally, 60 to 90 days after the date is first set for the meeting of creditors. This gives you the debtor a fresh start. You can become debt free in two to four months instead of struggling to make payments for many years with creditors constantly calling you. I am pleased to say that I have helped so many get a new beginning and a fresh start. What is the most common reason for denying a chapter 7 discharge of debts? The grounds for denying an individual debtor a discharge in a chapter 7 case are narrow and are construed against the moving party. 1. The bankruptcy court may deny the debtor a discharge if it finds that the debtor has failed to keep or produce adequate books or financial records. This is why it is very important that you provide as much data as you can produce. 2. Failed to explain satisfactorily any loss of assets; 3. Committed a bankruptcy crime such as perjury; 4. Failed to obey a lawful order of the bankruptcy court; 5. Fraudulently transferred, concealed, or destroyed property that would have become property of the estate; 6. Failed to complete an approved instructional course concerning financial management. 7. Secured creditors may retain some rights to seize property securing an underlying debt even after a discharge is granted. CAN I REAFFIRM A DEBT SUCH AS MY CAR? Depending on individual circumstances, if a debtor wishes to keep certain secured property (such as an automobile), he or she may decide to "reaffirm" the debt. A reaffirmation is an agreement between the debtor and the creditor that the debtor will remain liable and will pay all or a portion of the money owed, even though the debt would otherwise be discharged in the bankruptcy. In return, the creditor promises that it will not repossess or take back the automobile or other property so long as the debtor continues to pay the debt. If the debtor decides to reaffirm a debt, he or she must do so before the discharge is entered. The debtor must sign a written reaffirmation agreement and file it with the court. 11 U.S.C. § 524(c). The Bankruptcy Code requires that reaffirmation agreements contain an extensive set of disclosures described in 11 U.S.C. § 524(k). Among other things, the disclosures must advise the debtor of the amount of the debt being reaffirmed and how it is calculated and that reaffirmation means that the debtor's personal liability for that debt will not be discharged in the bankruptcy. The disclosures also require the debtor to sign and file a statement of his or her current income and expenses which shows that the balance of income paying expenses is sufficient to pay the reaffirmed debt. If the balance is not enough to pay the debt to be reaffirmed, there is a presumption of undue hardship, and the court may decide not to approve the reaffirmation agreement. If you are NOT represented by an attorney, then the bankruptcy judge must approve the reaffirmation agreement. If the debtor was represented by an attorney in connection with the reaffirmation agreement, the attorney must certify in writing that he or she advised the debtor of the legal effect and consequences of the agreement, including a default under the agreement. The attorney must also certify that the debtor was fully informed and voluntarily made the agreement and that reaffirmation of the debt will not create an undue hardship for the debtor or the debtor's dependants. An individual receives a discharge for most of his or her debts in a chapter 7 bankruptcy case. A creditor may no longer initiate or continue any legal or other action against the debtor to collect a discharged debt. Not all of an individual's debts are discharged in chapter 7. Debts not discharged include debts for: 1. Alimony and child support; 2. Certain taxes; 3. Debts for certain educational benefit; 4. Overpayments or loans made or guaranteed by a governmental unit; 5. Debts for willful and malicious injury by the debtor to another entity; 6. or to the property of another entity; 7. Debts for death or personal injury caused by the debtor's operation of a motor vehicle while the debtor was intoxicated from alcohol or other substances; 8. Debts for certain criminal restitution orders, 11 U.S.C. § 523(a); 9. The debtor will continue to be liable for these types of debts to the extent that they are not paid in the chapter 7 case; 10. Debts for money or property obtained by false pretenses; 11. Debts for fraud or defalcation while acting in a fiduciary capacity; 12. and debts for willful and malicious injury by the debtor to another entity or to the property of another entity will be discharged unless a creditor timely files and prevails in an action to have such debts declared non-dischargeable. Can The Bankruptcy Court Later Revoke the Chapter 7? 1. The court may revoke a chapter 7 discharge on the request of the trustee, a creditor, or the U.S. trustee if the discharge was obtained through fraud by the debtor. 2. If the debtor acquired property that is property of the estate and knowingly and fraudulently failed to report the acquisition of such property or to surrender the property to the trustee. 3. If the debtor (without a satisfactory explanation) makes a material misstatement or fails to provide documents or other information in connection with an audit of the debtor's case. 11 U.S.C. § 727(d). Alternatives to Chapter 7 Bankruptcy Debtors should be aware that there are several alternatives to chapter 7 relief. For example, debtors who are engaged in business, including corporations, partnerships, and sole proprietorships, may prefer to remain in business and avoid liquidation. Such debtors should consider filing a petition under chapter 11 of the Bankruptcy Code. Under chapter 11, the debtor may seek an adjustment of debts, either by reducing the debt or by extending the time for repayment, or may seek a more comprehensive reorganization. Sole proprietorships may also be eligible for relief under chapter 13 of the Bankruptcy Code. In addition, individual debtors who have regular income may seek an adjustment of debts under chapter 13 of the Bankruptcy Code. A particular advantage of chapter 13 is that it provides individual debtors with an opportunity to save their homes from foreclosure by allowing them to "catch up" past due payments through a payment plan. Moreover, the court may dismiss a chapter 7 case filed by an individual whose debts are primarily consumer rather than business debts if the court finds that the granting of relief would be an abuse of chapter 7. If the debtor's "current monthly income" is more than the state median, the Bankruptcy Code requires application of a "means test" to determine whether the chapter 7 filing is presumptively abusive. Review of the Chapter 7 bankruptcy process. Learn about the Chapter 7 process before filing. Call about Pre-filing bankruptcy. Bankruptcy La Mesa, CA 619 447-6780
La Mesa, CA. Bankruptcy Chapter 7. Free Bankruptcy Consultation. Looking to file a Chapter 7 bankruptcy. Not sure if you qualify for a Chapter 7. Free bankruptcy consultation & Pre-filing Bankruptcy. La Mesa, CA 619 447-6780 How Chapter 7 Bankruptcy Works. Chapter 7 Debt Relief, La Mesa CA |
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