Chapter 7 Bankruptcy Lawyers
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A Chapter 7 bankruptcy attorney can help find the best outcome for financial problems that come up unexpectedly. Divorce, unemployment, sudden medical expenses – all of these issues can quickly drain your cash reserves and leave you penniless.
However, there are always a number of solutions that can help you regain your financial stability. If you find yourself in one of these situations, consult with a Chapter 7 bankruptcy attorney and find a solution for your financial issues. Our experienced attorneys in Dallas and Fort Worth serve the needs of people who are looking for debt relief in the form of a Chapter 7 bankruptcy.
We can provide you with the information you need, including Texas state exemptions. Before you make a decision regarding your bankruptcy declaration, get expert advice from an experienced bankruptcy attorney.
Helpful Information About Chapter 7 Bankruptcy
What is Chapter 7 Bankruptcy?
Unlike its counterparts, Chapter 7 bankruptcy does not entail the filing of a repayment plan. Many people are leery of Chapter 7 bankruptcy because they think the trustee will sell all of the their property. In the vast majority of cases, no property has to be given up or sold. It is important to realize that Chapter 7 does not provide protection against foreclosure or repossession, however, so if one of your goals is to save your home or your car through bankruptcy, a Chapter 13 bankruptcy might be more advantageous.
To be eligible for Chapter 7, the debtor must be a person, corporation, partnership, or other business entity. It does not matter how solvent the filer’s debts are. An individual, however, is generally not eligible to file for Chapter 7 protection if he or she has filed in the last 180 days. The filer must also attend a credit counseling course with an approved agency. There are sometimes exceptions in regards to eligibility as determined by the court. The overall idea of Chapter 7 is to provide the debtor with a “fresh start.” Once the debts have been discharged through the protection plan, the debtor is no longer responsible for those debts.
There are some forms of debts that are not dischargeable, such as student loans, child support and some taxes. When a debtor files for Chapter 7 bankruptcy protection, there are a series of additional forms that must also be submitted. These forms include the following:
- A list of assets
- A list of liabilities
- An income report
- A list of current expenses
- A schedule of any executory contracts and leases
- A copy of the debtor’s most recently filed tax returns
- Proof of credit counseling
- A list of exempt property
Upon filing, the debtor is subjected to a case filing fee of $335. When a petition is filed, an automatic stay goes into effect stopping most, if not all, collection activity. The benefits of the stay, however, are subject to the bankruptcy code and in certain cases do not apply or are temporary. Not long after the petition is filed, the court’s trustee will hold a meeting for the creditors to make sure there are no objections (this is a rare occurrence). Once the petition is approved, it is just a matter of months until all eligible debts are completely discharged (wiped out).
Qualifications for Chapter 7 Bankruptcy
Chapter 7 bankruptcy is a rather quick process that may take only several months. Not everyone has the qualifications for Chapter 7 bankruptcy, but most people who are experiencing financial challenges will meet the requirements to file. Chapter 7 works best for people who:
- Have a lot of credit card and/or medical debt.
- Keep receiving collection calls and notices.
- Do not have enough income to pay off bills.
- Do not own much property or are current on house and car payments.
- Have low credit score.
Since 2005, bankruptcy laws require that the people seeking Chapter 7 protection submit their proof of income. If your income is equal to or below the state median income level, you will be eligible to file for Chapter 7. However, if your income exceeds the state median income level, you may be required to undergo means testing. Means testing determines if you are able to repay some of your unsecured debt with disposable income, or income that may be left over at the end of the month after all necessities are paid. Leinart Law Firm offers a complimentary consultation and evaluation, during which we can determine whether you have qualifications for Chapter 7 bankruptcy requirements.
Required Documents for Chapter 7
One of the most time consuming parts of filing for bankruptcy is gathering all the information that is required. Below is a general list of the paperwork you will need in a typical filing. First, create an inventory of all your assets and their fair market value. If you have statements for these items, include the most up-to-date statement. These include:
- Any cash you own
- Annuities or CDs
- Checking and savings accounts
- Profit sharing accounts
- Pension, 401k, IRAs, or other retirement accounts
- Furniture, computer equipment, electronics and other household goods
- Deposits you’ve placed with landlords, utility companies, landlords and more
- Collectible items such as antiques, books, art, etc.
- Any other transport such as boats, airplanes, jet skis, etc.
- Jewelry and luxury clothing (such as furs)
- Sporting equipment, photographic equipment, firearms, etc.
- Insurance policies, stocks and corporate or government bonds
- Any money that is owed to you, such as tax refunds, outstanding personal loans, etc.
- Property settlement documents, such as alimony, support payments, etc.
- Any patents, copyrights, or trademarks you own outright.
- Office equipment and/or machinery
You will also need to list any and all real property you own and the fair market value of that property. Make sure to include:
- Vacation Homes
- Parcels of land
The purpose of this is not to create a list of items to be sold, but to make sure the debtor fully qualifies for a Chapter 7 bankruptcy and does not own too many assets.
What Kinds of Debts Are Not Written Off in Chapter 7?
Most debts are legally written off, or discharged under Chapter 7, the most common type of bankruptcy. In fact, bankruptcy law doesn’t tell us what kinds of debts are discharged, instead saying that all debts are discharged except a limited list of those that are not. So, the discharge of debts granted under Section 727 of the Bankruptcy Code applies to all debts except for those listed as exceptions to discharge in Section 523 of the Code. These listed exceptions to discharge can be divided into two categories: 1) debts which are discharged as long as the creditor does not object, and 2) debts which are not discharged even if no objection is raised by the creditor.
Debts Discharged Unless Objection Raised
Creditors can challenge your ability to discharge three types of debt:
- Debts that arose by you making a false representation or committing fraud to get the loan or other form of credit. This can take the form of an intentional falsehood on a loan application, a cash advances or use of your credit card when you had no intention of paying back that credit, or any other way of deceitfully incurring a debt.
- Debts for theft or embezzlement, for fraud while in a trust relationship, including misappropriation of money or property while in that relationship. This can include stealing from one’s employer, cheating a business partner, or inducing an elderly relative to change his or her will in your favor.
- Obligations resulting from intentionally and maliciously harming a person or business, or its property. This includes bodily injuries and property damage caused intentionally, such as during a domestic disturbance or bar fight.
The person or business which has a claim against you for any of these types of debts must file a formal adversary proceeding within a rather short window of time—usually within 60 days of your meeting of creditors—or else that debt is discharged along with the rest of your debts.
Debts Not Discharged Even if No Objection Is Raised
The following types of debts are not discharged, regardless whether the creditor complains or not:
- Criminal fines, fees, and restitution
- Some types of taxes (this depends on the nature of the tax owed as well as the age)
- Child support, spousal support and maintenance
- Most student loans
- Claims for bodily injury or death from driving a vehicle, boat, or aircraft while intoxicated
- Debts not listed on your bankruptcy schedules
Secured Debts in Chapter 7
A secured debt is one in which your obligation to pay is secured by the creditor’s rights the collateral. If you do not stay current on the debt, that triggers the creditor’s ability to pursue that collateral, to repossess a vehicle, for example. Chapter 7, the most straightforward type of bankruptcy, gives you some important advantages in dealing with your secured debts.
The Reaffirmation Option
If you are current on your secured debt and want to keep the collateral, you can almost always do so. People are sometimes afraid that upon filing a bankruptcy they would not be allowed to keep making payments on a vehicle or home. But in fact one very legitimate reason to file a Chapter 7 case is to discharge (get rid of) unsecured debts in order to be able to afford your vehicle or home payments. However, if you want to keep making payments on a secured debt, you may need to sign a reaffirmation agreement. Just like it sounds, through that agreement you are reaffirming the debt. Why do you need to sign a document agreeing to pay for a debt that you’d already agreed to pay originally? Because your bankruptcy discharge order, which legally writes off your debts, would otherwise write off this obligation as well. A reaffirmation agreement excludes the reaffirmed debt from that discharge. You are choosing to stay legally liable on that debt as if you had never filed the bankruptcy. You should always discuss this with your attorney, though, as there may be situations where this is not advisable.
The Surrender Option
Chapter 7 gives you the option of surrendering the collateral (property) if you do not need or want it any longer, or just can’t afford to make the payments. Surrendering collateral usually doesn’t make sense outside bankruptcy, at least not with “recourse” debts secured by a vehicle or other personal property. That’s because after you surrender the collateral, the creditor will sell it at an auction, usually for less than the balance. Then after adding the auction costs and other fees to the balance, the creditor will come after you for this “deficiency balance.” But in a Chapter 7 case, that balance is discharged, making surrender a much more sensible option.
Our Attorneys Can Help Relieve Your Debt
At Leinart Law Firm, we focus on bankruptcy and debt solutions, so we know exactly what legal protection you may be granted under Chapter 7 bankruptcy laws. With more than 15 years of experience with bankruptcy law, we have filed thousands of bankruptcies and helped many people to make a fresh start. Learn more about our other debt solutions: