A Chapter 7 Bankruptcy Case will eliminate or “discharge” most or all of a client’s debt, and will allow the client to obtain a “fresh financial start”.
A Chapter 7 case is a highly effective tool in dealing with burdensome credit card and other unsecured debts such as medical bills and personal loans. A Chapter 7 case is especially helpful when the client cannot pay their present bills and faces the prospect of creditor harassment, collection actions and bad credit. The Chapter 7 case will allow the client to immediately protect themselves from their creditors and obtain legal forgiveness for their debt so that they can obtain a “fresh start” and be able to rebuild their credit. As soon as the case is filed the “automatic stay” protects the client from their creditors and at the end of the case the bankruptcy discharge allows the client to obtain legal forgiveness for their debt. Most clients discharge all their unsecured debt, although clients are able to voluntarily keep or “reaffirm” certain debts. Most clients keep all of their property including their vehicles, homes and personal possessions as long as they stay current with the payments on these items and do not have too much equity in such property.
Please click here for more specific explanations about Chapter 7 bankruptcy and how it may help you in your present situation.
Chapter 7 is the most frequently used type of bankruptcy case and is often used by individuals who are overwhelmed by debts – including credit card debt, medical bills, repossession/foreclosure deficiencies or other debt – to eliminate their legal obligation to pay (or to “discharge”) such debt. Persons qualifying for Chapter 7 relief need to have average six (6) months gross income that is below a certain level or pass a means test which takes into account the client’s expenses in determining if the client qualifies for Chapter 7 relief. A Chapter 7 case like all bankruptcy cases allows a client immediate protection against their creditors with an “automatic stay” (a court order which requires creditors to stop all collection activity and calls). At the end of a Chapter 7 case, which usually takes approximately four (4) months, the client receives a “discharge order” (a court order granting the client legal forgiveness for their debt).
Most chapter 7 cases are highly effective in allowing a client to quickly deal with and resolve their problems by eliminating their obligation to pay debt that is beyond their ability to pay. However, a bankruptcy attorney needs to carefully review a client’s circumstances with the client to determine that the client does not have issues that may complicate the case, like major assets with significant equity; income that may be too high; alleged “avoidable transfers”; and/or debt incurred by the client that may be deemed to be abusive and/or in bad faith.
Where there are issues with proper counsel they may be overcome. Income Issues may be challenging where the debtor is over the means test, but needs to file a case and find a way to bring income below the means test level for their household size. Asset Issues can be legitimately planned for if the debtor deliberates with counsel and engages in bankruptcy planning before filing the case. Avoidable transfer issues sometimes can be undone if the transfer is reversed or mitigated. And abusive or “bad faith” debt issues may be overcome with some strategic repayment and/or time.
However, where the issues are intractable and cannot be overcome, a bankruptcy attorney can explore other options like Chapter 13 or aggressive debt negotiations by our office.
A Chapter 7 case can be tricky in that on the surface a case may seem straight forward but there may be an asset issue, income issue and/or an avoidable transfer issue that is subtle and may need to be strategized and planned for prior to filing the case. If a Chapter 7 trustee or a creditor raise a potentially serious issue the case can get complicated, prolonged and risky. On the other hand a Chapter 7 case if correctly planned and filed can help discharge considerable debt that is burdening the debtor and can be a powerful tool to give a debtor a fresh financial start. Obtaining representation by a bankruptcy attorney can help a client realize the benefits of a Chapter 7 case and avoid its risks.
The Law Office of Ronald D. Weiss, P.C. regularly represents its clients in Chapter 7 cases before the United States Bankruptcy Court and can review with you issues relevant to a potential Chapter 7 case.
For more detail about Chapter 7, please click here.
Please call us at (631) 271-3737, or e-mail us at firstname.lastname@example.org for a free consultation to discuss such legal options in greater detail.