Chapter 7 Bankruptcy Attorney in Modesto

Chapter 7 is an affordable solution to people with limited income or resources. It is a liquidation bankruptcy that eliminates most of your general unsecured debts such as credit cards and medical bills without the need to pay back balances through a repayment plan.

When you file for Chapter 7, an order called the “automatic stay” immediately stops most creditors from pursuing collection efforts and is a means to put an immediate end to harassing phone calls, legal action and garnishment by creditors. A bankruptcy trustee is then appointed to administer your case. The bankruptcy trustee gathers and sells the debtor's nonexempt assets and uses the proceeds of such assets to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code. Part of the debtor's property may be subject to liens and mortgages that pledge the property to other creditors. In addition, the Bankruptcy Code will allow the debtor to keep certain "exempt" property; but a trustee will liquidate the debtor's remaining assets. Accordingly, potential debtors should realize that the filing of a petition under chapter 7 may result in the loss of property but in many cases, debtors will not have to give up any of your property to file. This exempt property will generally include cash, household furnishings, clothing and other ordinary items, tools of trade, personal injury and worker’s compensation claims, up to one million dollars for retirement investments or pension plans, an automobile and equity in your residence. If you do not have equity in your residence or do not own your primary residence, the exempt property could include an additional wild card protection to protect extra assets such as additional vehicles, motorcycles, jet skis, quads, motor homes, trailers, boats, tax returns, time shares, and equity in non-residential property.

Chapter 7 Bankruptcy Eligibility

Under chapter 7 of the Bankruptcy Code, the debtor may be an individual, a partnership, or a corporation or other business entity. 11 U.S.C. §§ 101(41), 109(b). To qualify for relief under chapter 7 the debtor must meet income requirements. If the debtor exceeds the median Income requirements, he/she will have to file under Chapter 13 bankruptcy (link to Chapter 13 page in website). Subject to the means test for individual debtors, relief is available under chapter 7 irrespective of the amount of the debtor's debts or whether the debtor is solvent or insolvent.

An individual cannot file under chapter 7 or any other chapter, however, if during the preceding 180 days a prior bankruptcy petition was dismissed due to the debtor's willful failure to appear before the court or comply with orders of the court, or the debtor voluntarily dismissed the previous case after creditors sought relief from the bankruptcy court to recover property upon which they hold liens. 11 U.S.C. §§ 109(g), 362(d) and (e). In addition, no individual may be a debtor under chapter 7 or any chapter of the Bankruptcy Code unless he or she has, within 180 days before filing, received credit counseling from an approved credit counseling agency either in an individual or group briefing. 11 U.S.C. §§ 109, 111. There are exceptions in emergency situations or where the U.S. trustee (or bankruptcy administrator) has determined that there are insufficient approved agencies to provide the required counseling.

One of the primary purposes of bankruptcy is to discharge certain debts to give an honest individual debtor a "fresh start" when they are struggling to keep current on bills The debtor has no liability for discharged debts. In a chapter 7 case, however, a discharge is only available to individual debtors, not to partnerships or corporations. 11 U.S.C. § 727(a)(1). Although an individual chapter 7 case usually results in a discharge of debts, the right to a discharge is not absolute, and some types of debts are not discharged. Moreover, a bankruptcy discharge does not extinguish a lien on property.

We welcome the opportunity to discuss your specific situation and determine if a Chapter 7 Bankruptcy is right for you.