YORBA LINDA CHAPTER 7 LAWYER
Yorba Linda Chapter 7 Attorney
If you are currently considering filing for bankruptcy, you’re likely already in a stressful and possibly overwhelming position. As such, we’d like to lend a hand with the research process, hopefully making the situation just a bit simpler to understand.
Of course, deciding whether you will be filing for bankruptcy is anything but an easy decision. Plus, there is a good deal of stigma surrounding bankruptcy, including filing for Chapter 7 bankruptcy. However, just know that there’s nothing shameful in filing for bankruptcy if this is the most logical financial route for you to take. It’s admirable that you are taking the initiative and making the best possible decision for you and your family, even if that decision is a difficult one.
When to Consider Bankruptcy
While bankruptcy does not remove all debt, it can still be a highly beneficial route to take if you’re currently struggling with overwhelming debt. Still, it is crucial to keep in mind that bankruptcy will continue to affect you for quite a long time. As such, it isn’t a decision that should be made lightly.
For those in the Yorba Linda, CA area, just know that you have a fantastic legal resource at your disposal. Christopher P. Walker is a highly experienced bankruptcy attorney with over 20 years spent practicing law. If you are considering filing for Chapter 7 bankruptcy but aren’t quite sure how to proceed, then it may be time to contact the Law Office of Christopher P. Walker.
What Is Chapter 7 Bankruptcy?
First, we must establish what, exactly, Chapter 7 bankruptcy even is. After all, you should never be filing for bankruptcy without first having a clear understanding of the process and all that it entails. It’s also important to understand that there are differing methods of approaching bankruptcy. Two of the most common are Chapter 7 and Chapter 13. Knowing which is the best choice for your situation is a crucial first step. Many people struggling with financial issues have found that Chapter 7 bankruptcy is the answer, but it’s important to discuss your specific situation with a Yorba Linda Chapter 7 bankruptcy attorney.
To start, Chapter 7 bankruptcy is also commonly known as “liquidation” bankruptcy—so, if you have heard both of these terms and are confused, just know that they are synonymous. They will often be used interchangeably.
During Chapter 7, the debtor in question will surrender any non-exempt assets to the trustee. The trustee will then sell the debtor’s assets. All the proceeds will be used to pay any of the debtor’s unsecured creditors. Eventually, at the end of the process, whatever unsecured debt remains will be discharged.
Although the process sounds simple and doesn’t involve too many steps, just keep in mind that it typically takes about three to four months from beginning to end. So going in, don’t expect filing for Chapter 7 bankruptcy to be an overnight process. This will not be the case in any instance of bankruptcy, Chapter 7 or otherwise.
Further, Chapter 7 is a form of bankruptcy focusing primarily on an individual’s unsecured debts. In many instances, this “unsecured debt” comes in the form of medical debt or credit card debt. These are both common reasons that an individual may opt to file for Chapter 7 bankruptcy.
Secured Debts in Chapter 7 Bankruptcy
Secured debts, on the other hand, will not be fully discharged in Chapter 7 bankruptcy. Some common examples of secured debt are mortgage loans and auto loans. The only instance in which secured debts will be fully discharged during Chapter 7 bankruptcy is when someone is surrendering collateral. If the secured creditor does not make ongoing payments, it is still possible for that creditor to repossess or foreclose on the property used as security.
At that point, any personal liability that the debtor has for secured debts is discharged. Thus, the creditors will no longer be able to sue the debtor so long as they repossess or foreclose on the property before selling it for less than the total amount of debt.
COMMON MYTHS ABOUT CHAPTER 7 BANKRUPTCY
There are several popular myths surrounding Chapter 7 bankruptcy and the process of filing for it. Here are five of the most common myths, as well as the truth of what it means to file for bankruptcy.
- Filing for Bankruptcy Will Always Destroy Your Credit Rating
It isn’t untrue that filing for bankruptcy will impact your credit rating—because it definitely will. However, it’s essential to keep a few things in mind. For one, filing for bankruptcy will not completely ruin your credit rating beyond repair. Instead, try to look at the situation like this: Each time you miss a payment and create more debt, your credit rating is harmed. The longer you keep up this pattern, the lower your credit rating is going to fall.On the other hand, when you file for Chapter 7 bankruptcy, you are providing yourself with a fresh start. After filing, it will be far easier to begin building your credit rating back up over time. All in all, Chapter 7 bankruptcy can be a more efficient way to build your credit score back up, rather than using other techniques of debt management.
- Choosing to File for Bankruptcy Is Something You Can Only Do Once
While no one would like to be put in a position to file for bankruptcy twice, this isn’t impossible. Technically speaking, an individual is allowed to file for bankruptcy howeveroften believe they need to file. Just remember: You will probably need to go through a waiting period after each filing before you will be eligible to make another filing.
- Once You File for Bankruptcy, Everyone Around You Will Find Out About It
This can be a terrifying prospect for many people. After all, as we have previously mentioned, there is a large amount of stigma and shame associated with filing for bankruptcy—even if this stigma is unwarranted.Nonetheless, it’s not true that anyone and everyone will soon learn about your bankruptcy, whether you like it or not. The reality is unless you tell those around you about the situation, your creditors will be the only parties to know about the filing.Had you chosen to file for Chapter 13 bankruptcy rather than Chapter 7, some of your payments would indeed be taken directly from your paycheck. In that sort of instance, your employer would indeed be made aware of the bankruptcy. However, with Chapter 7, you aren’t going to need to worry about that happening. Even if bankruptcy filings are a part of the public record, it isn’t true that they are in any way publicized.
- Whenever You File for Chapter 7 Bankruptcy, You Will Lose All of Your Property
This is false, despite it being a popular misconception. In reality, when a debtor opts to file for Chapter 7 bankruptcy, they will only be required to surrender their non-exempt property. Fortunately, in the state of California, most debtors will be fully protected by exemptions. As such, most people will not be determined to possess non-exempt property.More often than not, after filing for Chapter 7, an individual will not be required to give up any of their property—especially not their house or their car, which are common (and understandable) concerns for people considering bankruptcy.(We will expand upon this particular topic more later on.)
- Once You File for Chapter 7 Bankruptcy, You’ll Never Be Able to Own Property Again
Like we have said, Chapter 7 bankruptcy typically allows an individual to keep all of their property. This makes it a highly preferable option for debtors once they have decided to file for bankruptcy. In addition, so long as you are putting in the effort, your credit rating should bounce back relatively quickly. Once all of these factors are sorted out, then it is entirely possible for a debtor to go on to purchase a home or a car at a later time.
WILL CHAPTER 7 MAKE ME LOSE MY CAR OR MY HOME?
You will probably to relieved to learn that, more often than not, instances of Chapter 7 bankruptcy are considered to be “no asset” cases. This is the case for the vast majority of Chapter 7 filings. In these “no asset” filings, debtors are allowed to keep all of their personal property. This occurs thanks to exemptions.
So, there’s not much need to worry about losing your car or your home after filing for Chapter 7 bankruptcy.
EXEMPTIONS IN CALIFORNIA CHAPTER 7 BANKRUPTCY FILINGS
Now, let’s talk a bit more about exemptions and how they apply to Chapter 7 bankruptcy.
Notably, the trustee is only allowed to sell non-exempt property. In California, there are two separate sets of exemptions, which are put in place to help protect the debtor’s property during Chapter 7 bankruptcy.
First, there’s System 1. This set of exceptions allows debtors to protect a maximum of $75,000 in real property equity if they’re currently single or $100,000 if they’re a family. (Additional protections are available for both low-income and disabled debtors.) Generally, the “real property” in question will be the debtor’s home.
Additionally, this first system protects a maximum of $2,900 in motor vehicle equity, as well as 75% of the debtor’s wages from the past 30 days before filing. System 1 includes a myriad of other exemptions, as well.
System 2, on the other hand, allows the debtor to protect a maximum of $26,925 in home equity, plus a maximum of $5,100 in motor vehicle equity, as well as other exemptions.
On top of this, the debtor’s retirement accounts, as well as their state and federal benefits, are also exempt in the state of California. Thus, those who opt to file for Chapter 7 can typically utilize exemptions to protect most (and often even all) of their most important assets.
WHO IS ELIGIBLE TO FILE FOR CHAPTER 7 BANKRUPTCY?
In the state of California, only select individuals will qualify for Chapter 7 bankruptcy. Therefore, before you decide that you’d like to file, make sure that you qualify. These qualifications are in place to determine whether the debtor is actually able to sustain a Chapter 13 repayment plan; if this turns out to be the case, then the debtor is ineligible for Chapter 7.
First, the individual will have to make sure they pass the Means Test. What is the Means Test? Well, it’s actually a pretty simple concept, although there are some trickier aspects. If the debtor makes less than the state median income, then the Means Test is easy to determine. These individuals will automatically pass, making them one step closer to successfully filing for Chapter 7 bankruptcy.
Alternatively, if someone earning over the state median income, it is still possible for them to pass the Means Test. Nonetheless, in instances such as this, the process becomes a bit more complex.
The Means Test will account for both income and expenses before comparing them to the California standards. Using this test, it will be possible to determine whether a Chapter 13 repayment plan is actually feasible.
Once you’ve passed the Means Test, you will also need to prove to the California court that your current monthly income is being used solely to pay reasonable and necessary expenses. If it is discovered that, after you’ve paid your living expenses, you still have money to pay creditors, then it’s possible that you may have to file for Chapter 13 bankruptcy instead.
WHAT DEBTS DOES CHAPTER 7 BANKRUPTCY NOT DISCHARGE?
As we have discussed, Chapter 7 bankruptcy will only discharge most of your unsecured debts. However, there are some exceptions to this rule. For instance, you will not be able to discharge most child support debts, student loan debts, or spousal support debts. Further, while most personal injury debts can be discharged, there is a notable exception for any injuries suffered due to the debtor driving drunk. In that case, the medical debts will not be eligible for discharge during Chapter 7.
DOES FILING FOR BANKRUPTCY HELP PROTECT AGAINST FORECLOSURE AND REPOSSESSION?
Yes, Chapter 7 bankruptcy can help protect you against foreclosure and repossession. As soon as you opt to file for bankruptcy, you will be protected by something known as the “automatic stay.” Under the automatic stay, creditors will be forced to stop any collection actions. Potential collections actions include not just foreclosure and repossession but also wage garnishment, bank levies, and collection lawsuits.
So, say you’ve successfully filed for bankruptcy. It will now be necessary for all of your creditors to work through the bankruptcy court. Thanks to the automatic stay that the debtor is provided with, they are given time to reorganize finances; this will also help to ensure that all creditors are treated fairly throughout the bankruptcy process.
WHAT CAN A CHAPTER 7 BANKRUPTCY ATTORNEY DO FOR ME?
When it comes to filing for Chapter 7 bankruptcy, it is essential to have a reliable attorney at your side.
The process of filing for bankruptcy isn’t a simple one. At the same time, each and every detail is essential, and even one small error can result in the dismissal of your case. Then, once again, you’ll be at the creditors’ mercy.
This is why hiring a Chapter 7 bankruptcy lawyer is so important. A bankruptcy lawyer has a thorough understanding of the bankruptcy processand how to succeed from start to finish. With a lawyer, you’ll find that the entire process is far less rocky, with fewer hiccups (or worse) due to errors. Whenever you are confused during the process or are unsure how to proceed, you’ll always have a reliable resource to turn to.
In short, a bankruptcy attorney can help ensure the success of your filing, as well as make the overall process far less stressful and prone to error. You’ll be able to effectively protect everything that’s important to you while your attorney ensures that you’re getting the most out of your discharge. This way, it’ll be far easier for a debtor to move forward with their financial slate truly wiped clean.
In addition, it is not unheard of for creditors to try circumventing the discharge. Without a lawyer, this can be a difficult situation to handle. A Chapter 7 bankruptcy attorney will be able to enforce the discharge if there are any attempts to disobey it.
HOW IS CHAPTER 7 DIFFERENT FROM CHAPTER 13 BANKRUPTCY?
There are some critical differences between Chapter 7 and Chapter 13 bankruptcy. As we mentioned earlier, if someone does not qualify for Chapter 7 bankruptcy, then their next option will be to file for Chapter 13 instead.
Chapter 7 bankruptcy is the most common type of bankruptcy for individual filers. Since this form of bankruptcy is based around liquidation, the court will sell all of a person’s eligible assets for cash, then use this money to pay all creditors. Oftentimes, it is possible for Chapter 7 bankruptcy to entirely wipe out an individual’s debts. However, not everyone can qualify for Chapter 7. You will have to pass the Means Test, which is used to prove that a person doesn’t earn enough money to start on a Chapter 13 repayment plan. If a Chapter 13 repayment plan is proven to be financially feasible for the debtor, they will no longer qualify for Chapter 7.
Chapter 13 bankruptcy, however, is designed for individuals with an average (rather than a below-average) income. The process of Chapter 13 is slower than with Chapter 7 bankruptcy; from start to finish, the process of Chapter 13 bankruptcy takes anywhere from three to five years to complete. However, the individual will always be able to keep their property. Chapter 13 features limits of its own, where not all forms of debt can qualify, as well as not all amounts of debt. If you don’t qualify for Chapter 7 bankruptcy, then speak to an attorney to determine whether you are eligible for Chapter 13.
HOW DO I KNOW IF CHAPTER 7 BANKRUPTCY IS THE RIGHT CHOICE FOR ME?
Deciding whether to file for bankruptcy, Chapter 7 or otherwise, is anything but a simple decision. Further, this isn’t a decision that you should ever be made on a whim. Therefore, before filing, you must determine whether Chapter 7 bankruptcy is truly the best option for you in your unique situation. Speaking to a bankruptcy attorney is one potential way to determine this if you’re lost or unsure.
First, consider everything that we’ve discussed up until this point. If this still sounds like the best route for you, and you believe that you qualify, then contact an experienced California Chapter 7 bankruptcy attorney. The Law Office of Christopher P. Walker is always ready to help you regain financial independence and begin rebuilding your credit rating from the ground up. We’ll work one-on-one with you to determine the best route for your unique financial situation.
HIRE AN EXPERIENCED CHAPTER 7 BANKRUPTCY LAWYER IN YORBA LINDA, CA
Are you located in the Yorba Linda, California area, and considering filing for Chapter 7 bankruptcy? We understand that this is anything but an easy decision. Being in a position where filing for bankruptcy is necessary can be overwhelming, and it isn’t a process that you should proceed with on your own. Unfortunately, even if you make a small error during the process of filing, it will be possible for your entire case to be dismissed. However, this outcome can be avoided if you hire an experienced, reliable Chapter 7 bankruptcy attorney.
This is precisely why you should turn to the services of the Law Office of Christopher P. Walker. Our compassionate team of attorneys understand that no one comes to a decision about bankruptcy lightly. Over 20 years into his law career, Christopher P. Walker has developed a deep understanding of the legal process, especially when it comes to bankruptcy. Interested in scheduling a consultation? You can contact our office through our online form or give us a call.