The typical Chapter 7 bankruptcy process usually takes approximately four to six months and involves one court appearance about 30 days after your case is filed with the bankruptcy court. This hearing, called the “Meeting of Creditors” is to allow the trustee and any other parties in interest an opportunity to question the debtor regarding the nature and location of assets disclosed in the bankruptcy petition.
After the hearing, the bankruptcy court gives creditors 60 additional days to object to the bankruptcy case if there is a basis to do so. After the 60 day period expires, the bankruptcy court will enter the bankruptcy discharge. The bankruptcy discharge is a court order that effectively eliminates a consumer’s unsecured debts, including medical bills, and credit cards. The bankruptcy discharge also eliminates personal loans, repossessions that have judgment deficiencies, and other debts such as older past due taxes and over-payment of benefits such as unemployment or social security.
There are many different requirements that are necessary to complete in order to qualify to file for Chapter 7 Bankruptcy. It is highly advised that you find a knowledgeable Chapter 7 bankruptcy attorney to help you through this process. One of the requirements is passing the means test.
In order for the bankruptcy court to approve a candidate’s eligibility for Chapter 7 bankruptcy, a debtor must first pass a formula known as the means test. If a debtor passes, they may proceed with filing a Chapter 7 bankruptcy. If the debtor fails the means test, absent special circumstances they are ineligible to file a Chapter 7 bankruptcy and must instead consider filing for debt-relief under another Chapter of the Bankruptcy Code.
The means test is far more complex than the limited description above, and it is recommended that an experienced and knowledgeable chapter 7 bankruptcy attorney performs the means test for you. This ensures you will get an accurate and reliable result and can determine which bankruptcy option is right for you.
Another one of the requirements in order to file for Chapter 7 bankruptcy is the completion of a credit counseling course. These can be completed either by phone or online. A certificate is issued that must be filed with the bankruptcy court with the initial bankruptcy petition. Only debtors whose debts are primarily consumer debts must complete the credit counseling requirement before filing for bankruptcy protection. A chapter 7 bankruptcy lawyer can assist you in determining whether your debts are of this type. During the bankruptcy credit counseling process, your budget and additional information is analyzed by a credit counselor, who will let you know if there are other alternatives in addition to bankruptcy. Regardless of the results, you should rely on the advice of your San Diego bankruptcy attorney about any other options better suited for you.
In a typical Chapter 7 bankruptcy, most property and assets are exempt from liquidation due to available bankruptcy exemptions. Whether property is exempt and the basis for the exemption can vary according to the state that your bankruptcy case is filed in. For example, if you file for bankruptcy protection in California, the equity in your home, your household items, equipment used for work, and your primary vehicle typically are exempt. While most items are exempt in a Chapter 7 bankruptcy, in a case that something is not, a court appointed trustee will determine whether these assets can in fact be liquidated, and if the amount of cash received for the asset is of substantial value to be of benefit to any or all creditors.
The last step in the Chapter 7 bankruptcy process before the bankruptcy court will grant you a discharge is to complete a Debtor Education Course, which usually takes about an hour to complete. This course is designed to provide useful tips on budgeting and other helpful tools to assist individuals emerging from bankruptcy with practical information on how to manage finances moving forward.
The amount of attorney fees you must pay when you file for bankruptcy depends on a number of factors including the amount of work the case will involve, taking into account the complexity of the case.
A knowledgeable bankruptcy attorney can usually give you an estimate of fees by considering various factors of a case such as how much unsecured debt is involved, how many creditor’s claims are anticipated to be filed, and other information regarding income and assets. A good bankruptcy lawyer will quote you a flat fee for the entire case from start to finish with no additional fees charged. A “run-of-the-mill” routine Chapter 7 bankruptcy case with limited income and assets should cost between $1,200 and $1,700. Highly complex cases can cost anywhere from $2,000 to $3,500.
While many cases are routine, filing for bankruptcy can be a very complex process. The difficulty increased significantly when the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) was signed into law in 2005. This overhaul of the bankruptcy laws has made bankruptcy practice complicated. It has also created many traps for the uneducated or “part-time” bankruptcy lawyer.
In order to navigate through most of these hurdles and ensure that your bankruptcy case is handled with competent care and attention, a debtor contemplating bankruptcy should always consult with an experienced chapter 7 bankruptcy attorney. The bankruptcy court is usually not pleased when a debtor who is representing himself is unprepared, and there are many details in a routine bankruptcy case that must be thoroughly researched prior to filing. With our extensive experience in handling Chapter 7 bankruptcy cases we find it is paramount to hire a qualified bankruptcy lawyer to assist you through this process.