Chapter 7 Bankruptcy
Are you having issues with repayment of your debts? Are you being threatened with wage garnishment, foreclosure or repossession?
If you're feeling trapped by debt, filing for Chapter 7 bankruptcy can release you from consumer debt resulting from medical bills, credit cards, personal loans, and prior repossessions. Plus, a Chapter 7 bankruptcy may significantly improve your financial condition in as little as a few months.
If you need legal advice to determine if you qualify or you want to learn more about what to expect during the bankruptcy process, give us a call or send us an email to speak with an experienced bankruptcy attorney, and we'll be happy to answer your questions.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is sometimes referred to as "liquidation" or "straight liquidation" bankruptcy. It allows you to get rid of your unsecured debts, such as credit cards, medical bills, personal loans, payday loans, auto loan deficiencies, etc., and get a fresh start. In return for discharging (i.e., wiping out) your unsecured debts, the Bankruptcy Court appoints a chapter 7 trustee to your case who has the right to sell any property you own that is not exempt under the law. In most cases, a chapter 7 bankruptcy debtor will not have any assets for the trustee to liquidate, the debtor's unsecured debts will be discharged, and the debtor's personal obligation to pay the debts in the future is gone.
Advantages of Chapter 7:
Chapter 7 bankruptcy can free you from your unsecured debts. These debts include those not backed by collateral like liens or specific assets. If you have little income or property, Chapter 7 bankruptcy can eliminate debts including most:
Credit card bills
Personal and payday advance loans
Old utility bills
You will generally receive a bankruptcy discharge within four to five months of filing for a Chapter 7 bankruptcy.
No monthly payment to creditors – this is especially beneficial if you are currently unemployed or have minimal disposable income.
As soon as you file a Chapter 7 bankruptcy petition, it is not legal for creditors or debt collection agencies to contact you. This is known as the Automatic Stay. This protection will start from the moment you file a petition in the court. The only time the creditor can contact you is when he is reaffirming a debt that is to be repaid separately such as car loan or mortgage.
Even though Chapter 7 bankruptcy can stay on your credit report for as many as 8-10 years, it offers a long-term solution that prevents your debts from becoming even more substantial.
Who Qualifies for Chapter 7?
Filing for Chapter 7 bankruptcy can be a quick and effective way to take control of your debt. But to qualify to file under Chapter 7, you must pass a “means test”. The means test measures factors related to monthly income and limits Chapter 7 to people who truly cannot afford to repay their debts.
If you want to file for Chapter 7 bankruptcy, you must meet specific criteria:
Must be an individual debtor.
Only individuals and those filing jointly as husband and wife can file for Chapter 7 bankruptcy.
You are not barred by a previous bankruptcy.
You are ineligible for Chapter 7 bankruptcy if you filed for Chapter 7 in the past eight years.
You must pass the Chapter 7 Means Test.
This requires calculating your current monthly income, or your average income during the six calendar months before you file for Chapter 7. If your current monthly income is lower than your state’s median income, you may qualify for Chapter 7. If your current monthly income is higher than the median, you may be required to file a Chapter 13 bankruptcy.
Understanding the Chapter 7
The means test can be confusing, and a mistake or omission in your bankruptcy petition can put your ability to file for Chapter 7 bankruptcy at risk. Give us a call to speak with an experienced Oregon bankruptcy attorney who can evaluate your financial situation to help determine if you qualify for Chapter 7 bankruptcy and whether a Chapter 7 bankruptcy is the best option for you.
For more information, call 503-505-0411 or email: