Chapter 7 Bankruptcy: Breaking the Cycle of Debt

Anyone who has struggled with money knows how difficult it is to break the cycle of debt.

Bankruptcy is a tool people can use to restructure their finances, but it is often misunderstood. There is sometimes a stigma around filing for bankruptcy, despite its usefulness and the fact that filing for bankruptcy is a perfectly legal tool to eliminate debt.

In California, 18,817 bankruptcy petitions have been filed as of June 2021. If you’re struggling with your bills, you are not alone.

A meeting with a bankruptcy attorney could be the first step toward getting your bills back under control. Filing bankruptcy can also help set you up for future financial success.

There are several different types of bankruptcy under the Bankruptcy Code, including Chapter 11 and Chapter 13.

Today, we’ll be discussing Chapter 7.

When Should You Consider Filing Chapter 7 Bankruptcy?

When Should You Consider Filing Chapter 7 Bankruptcy?

The cycle of debt can take a toll on both your financial and emotional well-being. If you are struggling with paying your bills, filing for Chapter 7 bankruptcy might be the right choice for you to get a fresh start.

If you can answer “yes” to any of these five questions, you should consider speaking to an attorney who specializes in bankruptcy

  1. Do your debts cause issues with your quality of life – like your ability to get a good night’s sleep or causing arguments with a spouse or partner?
  2. Do your debts total more than half your annual income?
  3. Would it take more than five years to pay off your debt even if you took extreme measures?
  4. Do you feel like you have no money left over after you cover the necessities?
  5. Does your monthly payments on your expenses including revolving debt exceed your monthly income?

Chapter 7 bankruptcy is the simplest and most common form of bankruptcy. Almost all filers can expect to have their debts forgiven through the process.

And for most filers, the Chapter 7 process can be completed in 4-6 months.

Will I Qualify to File Chapter 7?

Will I Qualify to File Chapter 7?

In order to file Chapter 7 bankruptcy, you’ll have to pass a means test.  You cannot have filed another Chapter 7 within the past eight years or a Chapter 13 in the last six years.

You cannot have filed another bankruptcy petition in the previous 180 days that was dismissed because you failed to appear or to comply with the court’s orders or that you voluntarily dismissed because your creditors tried to recover property they had a lien against.

How Chapter 7 Bankruptcy Works

How Chapter 7 Bankruptcy Works

Chapter 7 is called a liquidation Chapter because any nonexempt assets can be liquidated by a court appointed trustee to repay your creditors.

This rarely happens – around 95% of all Chapter 7 cases filed do not have any assets which are not protected by state exemption laws.

Certain types of debts, such as credit card balances, business debt, personal loans and medical bills, can be discharged through a Chapter 7 bankruptcy. Unlike other forms of bankruptcy, you are not placed on a repayment plan.

Other common debts, like recent tax liabilities, child support, and student loans cannot be discharged in a Chapter 7 filing. Chapter 7 may still be the right choice for you if having dischargeable debts forgiven frees money up to get caught back up on debts that can’t be discharged.

When a Chapter 7 is filed, you are protected by an injunction called an automatic stay. Creditors can no longer contact you seeking repayment, nor can they:

  • Foreclose on your house
  • Have your utilities disconnected
  • Repossess property
  • Garnish your wages

Chapter 7 bankruptcy can be used by individuals, businesses, and sole proprietors to wipe away unsecured debts. Once these liabilities are removed, you will have the freedom to rebuild your credit.

Can I File for Bankruptcy on My Own?

Can I File for Bankruptcy on My Own?

While it is possible to file for bankruptcy without the help of a professional, it can be a tricky proposition. Even in cases that seem straightforward, complications can arise.

Some creditors may attempt to contact you after you have filed, or they may oppose your filing. It is also easy for laypeople to make mistakes in their filings, which can result in your discharge being denied or the trustee selling your property.

To protect your interests, it is recommended that you hire a certified specialist in bankruptcy.

Our Riverside office is run by attorney Frank X. Ruggier, an experienced litigator who is knowledgeable in both California and federal bankruptcy codes.

3 Benefits of Working with a Bankruptcy Attorney

3 Benefits of Working with a Bankruptcy Attorney

There are many benefits to working with a Riverside bankruptcy attorney; here are 3 you may not have considered:

You Won’t Be Lost in the Shuffle

Residents of Riverside and the Inland Empire know that in Southern California, many things tend to revolve around Los Angeles. You may even assume that using a law firm from “the city” will improve your case, but that isn’t always so.

Many metropolitan firms have dozens of lawyers. These lawyers take on numerous clients, and a team of paralegals will assist them as they prepare cases.

Unfortunately, clients sometimes feel lost in the shuffle of these giant practices. You may end up speaking to a different person each time you call the office or relying on paralegals for updates.

We are a boutique law firm. Our lawyers are intimately familiar with each case they take on; you will never have to speak to someone who is trying to learn about your case from their notes while they stall you on the phone.

Familiarity With Local Trustees

A trustee is appointed to each Chapter 7 bankruptcy case. Your trustee is assigned based on the division in which your case is filed. We have a working relationship with many trustees from the Central District of California – Riverside Division panel. In fact, Larry D. Simons is a Chapter 7 trustee assigned to the Riverside division.

Occasionally, disputes arise during the bankruptcy process. Your lawyers may need to negotiate – or even file litigation – in order to settle these matters. If your lawyer has a previous relationship with your trustee, it could help to resolve disputes more quickly.

Assistance with Your Finances

Our work is not strictly limited to resolving your Chapter 7 bankruptcy. At the Law Offices of Larry Simons, we believe in setting our clients up for future success.

We will review your entire financial situation and make recommendations that can help you going forward. We will make suggestions that can keep you from falling back into debt.

A Firm You Can Trust, Right Here in Riverside

A Firm You Can Trust, Right Here in Riverside

If you believe Chapter 7 bankruptcy could be right for your financial situation, contact the Law Offices of Larry D. Simons right now. We have offices in Mission Hills and Riverside.

There is no charge to speak to a certified bankruptcy specialist about your situation and you’ll have a better understanding about what can be done to help you become debt free.

Don’t wait another minute to take control of your money and eliminate debt.

Larry Simons

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