Life's financial curveballs can sideline you from meeting your various financial needs or paying debts. When going through financial adversity, filing for bankruptcy may be the ideal way for you to achieve the financial fresh start you need. In California, Chapter 7 bankruptcy is usually the most affordable debt relief option. If you are considering filing bankruptcy, it’s important that you consult with a knowledgeable California bankruptcy attorney for proper guidance.
Duffy Law is dedicated to providing experienced legal services and comprehensive representation to individuals and business owners for all bankruptcy-related matters. We are available to review your case, discuss your unique situation, and offer you the detailed legal counsel and advocacy you need to navigate the complexities of your unique situation. We are proud to have served clients across Irvine, Huntington Beach, and communities throughout Orange County, California for more than 12-years.
Chapter 7 bankruptcy, often referred to as "liquidation" bankruptcy, is a debt relief option designed to help individuals, families, and businesses clear away most of their unsecured debts and provide a deserved "fresh start." When filing for Chapter 7 bankruptcy, the trustee (an independent contractor appointed by the court to oversee your bankruptcy case) collects and sells your non-exempt assets. The net proceeds from the sale will be used to pay your creditors.
Non-exempt assets are assets or properties that can be sold by the trustee in a Chapter 7 bankruptcy case. They include vacation homes, second homes, second cars, stocks, family heirlooms, bonds, bank accounts, cash, and other investments. Individuals filing for Chapter 7 can keep exempt assets, including their marital house, primary vehicle, furniture pieces, household appliances, and clothing. Since bankruptcy is governed by federal laws, it is usually the same in all states.
Chapter 7 bankruptcy can help individuals and businesses in the following ways:
Wipe Out Unsecured Debts: Filing Chapter 7 wipes out your general unsecured debts, including unsecured personal loans, credit card debts, and medical bills.
Reduce Financial Duties: Filing Chapter 7 alleviates you of many of your other financial obligations, except spousal maintenance and child support payments.
Help Rebuild Credit Score: Although your credit may take an initial hit after filing for bankruptcy, Chapter 7 can help you rebuild your credit score gradually over time.
Activate Automatic Stay: After filing Chapter 7, California courts place an "automatic stay" on your existing debts. This will stop all creditor harassments and prevent debt collectors from garnishing your wages or collecting payments.
Stop an Eviction, Repossession, or Foreclosure: Once an automatic stay is activated after filing Chapter 7, collection agencies will not be able to evict you from, repossess, or foreclose on your home.
There are a few things Chapter 7 can't do, including:
Leave You Destitute: People often think Chapter 7 leaves you with nothing, but in most cases, you still get to hold on to your major assets, including your home and vehicles.
Eliminate Other Non-dischargeable Debts: Filing Chapter 7 may not eliminate some debts, such as fines and penalties, criminal restitution, divorce settlement debts, fraudulent debts, local, state, and federal taxes.
Alleviate Alimony and Child Support Obligations: Chapter 7 won't alleviate your responsibility to make alimony or child support payments. A family court decree will be required to suspend these.
Eliminate Student Loan Debts: Except in very rare circumstances, filing Chapter 7 won't eliminate your student loan debts.
Qualifying for Chapter 7 in California requires that your income is below California's median income for your household size. Also, you are required to attend a debtor education course and a credit counseling course from an agency approved by the U.S. Trustee in California within the past six months. The courses can be taken online and can be completed within two hours.
As mentioned earlier, your income must be lower than the California median income for your household size to qualify for Chapter 7.
One-person household – $60,360
Family of two members – $79,271
Family of three members – $88,235
Family of four members – $101,315
*Add $9,000 for each household in excess of 4 members.
If your income is above the California median income for your household size, qualifying for Chapter 7 will require you to complete the bankruptcy means test. The means test will evaluate your financial records and determine whether you can pay part of your unsecured debts through Chapter 13.
Chapter 7 is a good debt relief option when:
You don't have income or any valuable asset a creditor can go after.
It can eliminate a considerable part of your debt.
You have any property that you wish to keep and would like to list as non-exempt.
According to the American Bankruptcy Institute, about 69,432 bankruptcy cases were filed in California in 2019. Of these, 52,903 were filed under Chapter 7. These people didn't go through it alone, and neither should you. If you are considering filing for Chapter 7 Bankruptcy in California, it is important to consult with a knowledgeable attorney for proper guidance.
At Duffy Law, I have devoted my career to guiding clients through the Chapter 7 filing process. As your legal counsel, I will evaluate your unique situation, help you understand your options, and determine whether or not Chapter 7 is the right decision for you. I can also help file your bankruptcy forms, assist with documentation, and offer you the comprehensive legal guidance and advocacy you need throughout each step of the bankruptcy process.
If you're experiencing financial adversity and considering filing for bankruptcy, contact Duffy Law today to schedule a free one-on-one consultation. I can offer you the comprehensive legal guidance you need and help you navigate key decisions. I also proudly serve clients throughout Irvine, Huntington Beach, Orange County, Newport Beach, and Laguna Beach, California.