A Chapter 7 Bankruptcy is a process designed to help those individuals overwhelmed by debt to get back on their feet and back in control of their finances. A properly filed Chapter 7 Bankruptcy will discharge all of an individual’s dischargeable debts such as credit cards, personal loans, medical bills, legal judgments, deficiency judgments, etc. Moreover, the majority of Chapter 7 cases are “no assets” cases meaning that in most instances an individual will be able to keep their home, vehicle, 401K, and other personal assets.
As an additional benefit, the filing for Bankruptcy will stop the harassing collections phone calls. The law automatically stays creditors from trying to collect from the debtor until their case has been discharged or dismissed by the Federal Bankruptcy Court.
How Long Does A Chapter 7 Bankruptcy Take?
The average bankruptcy case takes about three to four months once it is filed. Much of the time and work comes in carefully preparing the petition. At your intake meeting you will be given a list of financial items and documents that you will have to accumulate along with a series of questions that you will have to answer. It is critical that your Attorney know everything possible before filing your petition. At our office, Attorney Culkin always sits with every client before finalizing any petition to ensure that no items have been left out or incomplete. Other steps that must be completed include both a pre and post credit counseling as well as a Section 341 Hearing. Our office has the knowledge and experience to get you through all of this process quickly and efficiently.
Will I Be Allowed to File for A Chapter 7?
In 2005 Congress made sweeping changes to its existing Bankruptcy laws and in so doing created additional requirements/obstacles for filing bankruptcy. Under the new laws a debtor must either qualify under the “median income” or “the means” test. These rules are highly technical and need to be addressed by a Bankruptcy Lawyer on a case-by-case basis.
While many debtors may believe that they can not qualify for a Chapter 7 Bankruptcy the statistics disagree. According to the National Association of Consumer Bankruptcy Attorneys, “at least 97 percent of those who could file for chapter 7 bankruptcy before the law changed are still able to file a chapter 7 today.”
Even if a debtor cannot qualify under the Chapter 7 requirements, there are still other options such as filing for a Chapter 13, which can be used to avoid foreclosures and restructure your debt, etc.
Do I Need to Hire a Lawyer to File for Bankruptcy?
Bankruptcy law is a very complicated set of laws and a debtor is strongly advised against attempting to file any petition on their own without experienced and competent legal representation.
What Types of Debts are Dischargeable in a Chapter 7 Bankruptcy?
• Credit Cards
• Medical Bills
• Court Judgements (excluding most Family Support Obligations)
• Personal Loans
• Negligence Claims
• Deficiency Judgments (Foreclosures and Repossessions)
Will I Lose My Assets?
No. In most instances a Chapter 7 case is a “no asset” case meaning that the debtor (you) will not have to give up any of your assets. There are special rules that involve your home, car and other property that is collateral for a loan/financed. Those assets are dealt with more specifically below.
Can I Keep My Home?
Most likely Yes. The answer depends on if there is any equity in your home and if so how much. Remember that if you are keeping your home you will still be responsible to pay for your mortgage regardless of your bankruptcy.
If there is no equity in your home then you will be allowed to keep your home following your bankruptcy.
If there is equity in your home then the issue becomes how much equity is there. A debtor filing bankruptcy can “exempt” up to $75,000 of the home’s equity for an individual or up to $150,000 for a joint filing.
If you are keeping your home most lenders will require that you “reaffirm” your debt. To be able to reaffirm your debt you will have to be able to demonstrate that you will be able to continue to afford your home following your bankruptcy.
Can I Keep My Car?
Most likely Yes. Similar to the questions about your home, the issue is whether or not you have any equity in your vehicle and if so how much. It has been my experience that many debtors finance their vehicles and do not have much if any equity in their vehicles.
In Connecticut a debtor is permitted to have up to $3,500 of equity in their vehicle. If you have more equity than $3,500 in your vehicle then you may still be able to still exempt your vehicle either under the Federal exemptions or even possibly by purchasing the unprotected equity.
If you are keeping your vehicle then most lenders will require that you “reaffirm” your debt.
For more information on how the Fournier Law Firm can help you navigate the bankruptcy process, contact us now for a free consultation.