Chapter 7 Bankruptcy provides for “liquidation” or elimination of unsecured debt. It provides relief from credit card debt, personal loans, medical bills, payday loans, and other credit that is not secured by property. Eliminating debt in Chapter 7 bankruptcy can free up the money needed to afford to pay the secured debt like a vehicle or home that an individual wants to retain.
The risk in Chapter 7 bankruptcy is that the person might not qualify, might lose their property, or might be challenged by a creditor or the bankruptcy trustee. These risks are carefully reviewed by our attorneys and thoroughly explained to any individual who potentially wishes to file Chapter 7.
Chapter 7 bankruptcy is for individuals or businesses who truly cannot afford to pay back their debts. To qualify, an individual must pass the means test, which is an analysis of income, expenses and total amount of debt. If an individual has enough disposable income to pay back even a portion of the total debt, that person will need to file for Chapter 13 bankruptcy.
The means test involves a complex formula and detailed knowledge about California’s median income levels. We provide a free means test analysis to assist in determining if individuals or businesses qualify for this type of debt relief.
After a Chapter 7 bankruptcy case is filed, the debtor receives a discharge of all applicable unsecured debt within about 120 days. It is a requirement to list all debts, however the Bankruptcy Code dictates what unsecured debt is eligible for discharge.
A bankruptcy discharge is a powerful and complete elimination of unsecured debt. This debt does not need to be repaid at some point in the future. Ask our attorneys if Chapter 7 is the best option for you.
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