Get Efficient Help From An Ontario Chapter 7 Bankruptcy Attorney
Chapter 7 Bankruptcy can provide a fresh start to those struggling under overwhelming debt. It is a legal process that lets people erase most of their unsecured debts. The process allows people to keep their exempt assets. It is designed for people who do not have the means to pay off their debts and typically involves a test based on income to determine eligibility. The process is often completed in several months, and at the end, most unsecured debts (such as credit card debt, medical bills, and personal loans) are erased.
Who Can File For Chapter 7 Bankruptcy?
As mentioned above, Chapter 7 is meant for people who cannot otherwise pay off their debts. Eligibility is determined based on your income using a “means test.” If you are eligible and approved, Chapter 7 Bankruptcy can erase many of your debts; however, certain debts may not be discharged. Debts like alimony and child support cannot be discharged in Chapter 7 Bankruptcy.
What Property Can I Keep In Chapter 7 Bankruptcy?
California provides exemptions which allow you to keep certain protected assets from being liquidated in a chapter 7 bankruptcy proceeding. There are two (2) distinct exemption schemes which allows you to keep your protected assets. You must choose only one exemption scheme to apply to your case.
System one (1), found in the California Code of Civil Procedure §703, is commonly known as the “non-homestead” exemption because it does not protect much of the debtor’s equity in their home; however, it does protect more of the debtor’s personal property assets than does System two (2). Items of personal property include household furnishings, clothing, motor vehicles, tools of trade, and other such items.
System two (2) is commonly known as the “homestead” exemption because it could protect a substantial amount of the equity in your home while providing less than generous exemptions for items of personal property than does System one (1).
Determining which exemptions system benefits your situation requires careful analysis of your specific assets and their current values.
Understanding Chapter 7 Means Test
Before deciding on the proper exemption system, you should first determine if you qualify to file for Chapter 7 bankruptcy by passing the Means Test. The Means Test determines eligibility for Chapter 7 bankruptcy by comparing your income to California’s median income levels for households of your size. This mathematical calculation is designed to prevent abuse of the bankruptcy system by high-income individuals who have the capacity to pay off their debt with a Chapter 13 repayment plan.
The first step in the Means Test examines your average monthly income during the six (6) months preceding your bankruptcy filing. If this figure falls below the applicable median income for California households of your size, then you automatically qualify for Chapter 7 bankruptcy relief without further analysis.
If your income exceeds the medium threshold, the Means Test proceeds to a second phase where it examines your allowable expenses and disposable income. This calculation subtracts standardized expense amounts established by the IRS, along with certain actual expenses, like mortgage payments, from your income. The formula determines whether sufficient disposable income exists to fund a meaningful Chapter 13 repayment plan.
Various income sources impact Means Test calculations including wages, self-employment and earnings, rental income, and regular contributions from household members. Certain income types are excluded, such as Social Security benefits and payments received under the Violence Against Women Act.
Frequently Asked Questions About Chapter 7 Bankruptcy
Below are answers to some common questions about Chapter 7 bankruptcy.
How will Chapter 7 bankruptcy affect my credit score?
A Chapter 7 bankruptcy typically causes an immediate decrease in your credit score, with the exact impact varying based on your pre-filing credit history. The bankruptcy filing remains on your credit report for 10 years from the filing date.
Many begin rebuilding their credit within 1-2 years after discharge by obtaining secured credit cards or small loans and making timely payments. The long-term effect of bankruptcy is often less damaging than continuing to miss payments on overwhelming debt. Many former bankruptcy clients report that freedom from debt collection and harassing calls provides peace of mind that outweighs credit score concerns.
How much debt do I need to have to file for Chapter 7 bankruptcy?
There is no minimum debt requirement to file for Chapter 7 bankruptcy. The decision to file should be based on your overall financial situation rather than a specific debt threshold. Some clients file with relatively modest debts when they see no realistic path to repayment due to job loss, medical issues or other financial hardships. Others with substantial debt may not qualify due to income limitations. The critical factors include the ability to repay debts and pass the means test, not the total amount owed.
How long does the Chapter 7 bankruptcy process take?
A typical case takes approximately 3-4 months from bankruptcy filing to discharge. The process begins with credit counseling, which must be completed before filing. After filing, you must attend a 341 meeting of creditors about 30-45 days later.
Assuming no complications arise, the court generally issues a discharge order about 60-90 days after this meeting. Certain factors can extend this timeline, including trustee requests for additional documentation, challenges to exemptions or creditor objections to discharge.
How quickly can I file for Chapter 7 bankruptcy to stop creditor actions?
With proper preparation, we can file your Chapter 7 bankruptcy case within days of your decision to proceed. Upon filing, the automatic stay immediately goes into effect, halting most collection activities, including lawsuits, wage garnishments, bank levies, utility disconnections and foreclosure proceedings. In emergency situations, we can prepare and file a bare-bones petition to establish the automatic stay quickly, then complete the remaining schedules and documentation within 14 days.
Contact An Experienced Ontario Chapter 7 Bankruptcy Lawyer
The Law Office of Curtis R. Aijala, APLC can assist you in filing for Chapter 7 bankruptcy. They can efficiently assess your situation, help you determine what is right for you and walk you through the entire bankruptcy process, ensuring all paperwork and documents are correct and submitted correctly. His staff speak Spanish and provide a high level of personal service with consistent communication.
Contact The Law Office of Curtis R. Aijala, APLC today to schedule a free initial assessment for efficient personal service and to learn more. Use the online contact form or call 909-983-0877 to get in touch.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.