Chapter 7 bankruptcy lawyer Jeff Hoffman can help clients get immediate debt relief.
If you are unable to pay your bills and have been threatened by debt collectors with lawsuits and wage garnishments, you owe it to yourself to explore whether Chapter 7 bankruptcy is the right solution for you.
Get relief from debts you can no longer afford to pay; Jeff will explain how Chapter 7 works and will represent you if you choose to file.
Contact us to schedule a free consultation with a knowledgeable bankruptcy lawyer.
Determining Your Chapter 7 Benefits and Eligibility
Chapter 7 bankruptcy allows people to discharge (eliminate) certain types of unsecured debt — debt that is not backed (secured) by a house, car or other property.
The most common types of debt people discharge in Chapter 7 are credit card debt, most lawsuits, medical and dental debts.
- Chapter 7 bankruptcy also discharges personal debt on secured debts; for example, if you don’t make your car payments and your car is repossessed, you would not owe any money for it even if it’s worth less than what you owe at the time it was repossessed.
- You may be worried about whether you are eligible for Chapter 7 bankruptcy, especially since the laws were changed in 2005.
As it turns out, most people who need the protections of Chapter 7 are eligible for them.
If your household income is below the median (average income) for households of your size, you can qualify for Chapter 7 as long as you are within the time limits described below.
You will not get your debts discharged in a Chapter 7 bankruptcy:
- If you are within eight years of filing a previous Chapter 7 where your debts were discharged (eliminated), or
- If you are within six years of filing a Chapter 13 where your debts were discharged (unless you had paid at least 70% of what you owed to your unsecured creditors).
If your household income is above the California median / average income, a “means test” calculates your disposable income (based on your income and reasonable monthly living expenses) and will determine whether you are eligible to file a Chapter 7 Bankruptcy.
- If you own a business as a sole proprietorship and have employees, and you wish to continue operating that business, Chapter 7 may not be the right solution for you unless you convert the business to a corporation, LLC, or another legal entity before filing.
In this case, Chapter 13 bankruptcy would allow you to continue operating your business while discharging all your credit card, doctor, medical, and personal loan debts.
- If you do not qualify for Chapter 7, and you wish to continue operating your business, or if you wish to retain your home and/or auto but you are having trouble paying for them, Chapter 13 bankruptcy may be a good alternative option for you.
Protecting your property from liquidation:
You may have heard that a Chapter 7 bankruptcy trustee can liquidate (sell off) your property to repay your unsecured creditors.
- Over 90% of people who file consumer chapter 7 cases can protect (exempt) all of their property, and the trustee does not take and sell anything. These exemptions protect your common household goods, clothing, etc.
If you are a family (more than a one-person household) and have less than $100,000 of equity in your home, OR are a single individual and have less than $75,000 equity, OR are either disabled, a senior (65 or older), or very low income, and have less than $175,000 equity, your home is automatically exempt and will not be taken to pay your debts.
- If you have more than the allowed equity for your category, and choose to file Chapter 7, and the trustee takes your house to pay your unsecured creditors, the trustee must pay you the applicable exemption amount in full ($75,000, $100,000, or $175,000).
These are the legally-allowed exemptions for your home. However, in reality you would have to have significantly more equity than your exemptions in order for a trustee to take your house, because it will cost the trustee between $10,000-$50,000 to list and sell it, and (s)he must still pay you the full exemption to which you are entitled.
There are also specific exemptions (protections) for vehicles, jewelry and other personal possessions.
There is also substantial “Wild Card” exemption of almost $27,000 — for those who do not have substantial equity in a home — which can be used to exempt money in your bank accounts and any property over the normal exemption limits.
Again, if the trustee takes any property in which you have equity above the exempt amount, (s)he must pay you the full exemption to which you are entitled.
- You can also protect your property and soften the blow by paying the trustee the amount of the equity that is above the exemption limit.
By filing a Chapter 13 bankruptcy, bankruptcy law gives you three or five years to pay the trustee the amount of equity that is not exempt, if you do not wish to surrender that property.
With rare exceptions, all money in your retirement and pension accounts is exempt.
Jeff will go over your assets with you carefully to determine whether you would have to give anything up in a Chapter 7.
If so, he will help you weigh your options so you can decide what is best for you and your family. Contact us today to schedule your free, no-obligation consultation.
Contact us online or by phone at 510-451-0290 to schedule an appointment.
We serve Oakland, Berkeley, San Francisco and the surrounding Bay Area.