Chapter 7 bankruptcy may sound frightening, but it can also mean you can get from under your financial burdens and back to a normal and respectful life. Read the following information to learn your options for receiving legal services for Chapter 7 bankruptcy in Colorado Springs from Maceau Law:
Chapter 7 bankruptcy, which is also sometimes known as liquidation bankruptcy, is the most common form of bankruptcy filed in the United States. Chapter 7 bankruptcy consists of the liquidation of a debtor’s assets by a court appointed trustee. This type of bankruptcy is designed to liquidate a debtor’s assets in order to pay their debt. In addition, some debts will be cancelled or discharged during the bankruptcy process.
Who can file Chapter 7 bankruptcy?
In order to file Chapter 7 bankruptcy, a debtor’s income must not exceed their state’s median household income. This is a requirement only for debtors whose debts come from consumer purchases instead of tort, tax or business debts. In addition, debtors must not file Chapter 7 bankruptcy on the behalf of a partnership, LLC or a corporation.
How many times can an individual file Chapter 7 bankruptcy?
A debtor is only eligible to file for Chapter 7 bankruptcy every eight years. In addition, a debtor is not allowed to file Chapter 7 bankruptcy until at least 180 days after a bankruptcy dismissal.
Process of filing Chapter 7 bankruptcy:
Meeting of the creditors:
After Chapter 7 bankruptcy is filed, a meeting of the creditors will take place. During this meeting, the debtor will be asked questions by the creditors and the appointed trustee.
Seizure of assets:
The bankruptcy trustee will seize and liquidate any nonexempt property owned by the debtor. Exemptions must be reflected in a Schedule C form filed by the debtor. After the trustee liquidates the debtor’s available assets, they will distribute the assets to the creditors.
After a few months, debtors remaining debts are discharged, meaning the debtor is no longer responsible to repay the debts owed. The process is also known as a permanent bankruptcy injunction.
What assets are considered exempt in a Chapter 7 bankruptcy?
Each state has a different set of exemptions. Therefore, it is almost impossible to list exemptions for all Chapter 7 bankruptcy cases. However, the following assets are usually considered exempt when filing for Chapter 7 bankruptcy:
- Public benefits from unemployment, welfare or Social Security income.
- Unpaid wages that are owed to the debtor.
- Tools used in a debtor’s trade.
- Some of the equity in a debtor’s home.
- Life insurance up to a certain amount.
- Jewelry up to a certain value.
- Needed household furnishings.
- Household appliances.
- Needed clothing items.
- Vehicles up to a certain value.
Assets that are typically not considered exempt are as follows:
- A second home or vacation home.
- A second vehicle.
- Investments, bonds, stocks, cash and money in bank accounts.
- Family heirlooms.
- Collections such as coin and stamp collections.
- Extravagant possessions such as expensive musical instruments unless they are used for a debtor’s income.
What debts are not dismissed when filing Chapter 7 bankruptcy?
There are several debts that will not be dismissed by filing Chapter 7 bankruptcy, and they are as follows:
- Debt incurred from court judgments or criminal convictions.
- Recent luxury debts: This includes debts over $550 incurred within 90 days prior to filing for bankruptcy or cash advances within 70 days prior to filing of more than $825.
- Debt from back taxes.
- Student loans except under specific hardship situations.
- Alimony obligations and back child support.
Advantages of Chapter 7 bankruptcy:
A Chapter 7 bankruptcy case is opened and closed very quickly typically within three to six months. When a debtor has filed Chapter 7 bankruptcy, they emerge debt-free except for certain types of undischargable debts. Moreover, although debtors can lose property and assets during the bankruptcy process, most assets are protected and are not liquidated. Finally, Chapter 7 bankruptcy does not require debtors to repay their debts through a debt repayment plan, making it less arduous.
What is a no-assets Chapter 7 bankruptcy?
The majority of Chapter 7 bankruptcies filed in the United States are considered no-assets cases. No-assets means that the debtor has no nonexempt assets they can liquidate in order to pay their creditors. A no-assets Chapter 7 bankruptcy allows the debtor to retain their assets and discharges applicable debt. To qualify for a no-assets bankruptcy, individuals will have to meet standards that vary by state. However, usually no-assets bankruptcy is filed when a debtor cannot afford to liquidate their few assets.
How much does it cost to file Chapter 7 bankruptcy?
The filing fee for Chapter 7 bankruptcy is $299. However, this number does not include any attorney’s fees. After filing Chapter 7 bankruptcy and hiring a qualified attorney, individuals usually end up paying between $700 and $2,000 to file Chapter 7 bankruptcy.
Is hiring an attorney necessary?
When filing Chapter 7 bankruptcy, it is wise to hire an experienced bankruptcy attorney. Bankruptcy codes and regulations can be very confusing and complex. Consequently, most individuals do not have the legal knowledge to successfully file bankruptcy on their own.
Expert Legal Representation for Chapter 7 Bankruptcy in Colorado Springs, Pueblo, and Castle Rock areas
Please call 719-633-2222 to schedule a consultation with one of our experienced Colorado Springs bankruptcy lawyers at Maceau Law. We’ll be sure that you are treated fairly and help you return to a stable financial position.