Bankruptcy Attorney

Chapter 7 Bankruptcy is the most common form of bankruptcy in California. In fact, there are more Chapter 7 filings in US courts each year than any other type. The rise in bankruptcies recently has been attributed to the severe economic fallout from the crash of the real estate market coupled with better consumer education about bankruptcy. This educational component has been crucial to helping people help themselves, as public perspective on bankruptcy for years was that it was anything but a consumer protection. However, bankruptcy protection was created in order to save consumers from financial disasters that negatively affect local and larger economies. Of these protections the most beneficial and useful to individuals is Chapter 7 bankruptcy in California.

The benefits of a Chapter 7 bankruptcy are designed to provide a fresh start to people who can no longer pay their debts. This type of bankruptcy is also known as Liquidation Bankruptcy. This means that property and assets that are not exempt from the bankruptcy are liquidated to pay creditors. However, most people will be able to keep the things that are most important to them:

• If your home/property has little equity it’s highly likely that it will be considered exempt
• Other property and assets that have little or no equity can be retained in most cases
• 401K accounts are exempt regardless of the amount
• Generally a person filing bankruptcy is permitted to keep up to $2500 in cash
• Personal items such as clothing, jewelry and occupation-specific items are typically exempt

Other benefits include:

• Chapter 7 bankruptcies in California cease most types of wage garnishments
• Stops all collections efforts from creditors included in the proceedings
• Relieves over-utilization issues related to credit standing
• Complete eradication of approved unsecured and other debts

Legislation passed in recent years has made it more difficult for individuals to declare bankruptcy. The current basic requirements include:

• Must pass a means test as defined by the federal government. This test seeks to determine how much (if any) disposable income exists and also measures the amortization of certain debts. This test is used to prove or disprove chronic financial distress necessitating bankruptcy. In general, monthly disposable income greater than $182.50 is considered sufficient reason to dismiss the bankruptcy proceedings or to force the filer into a Chapter 13.
• Must complete consumer credit counseling sometime within the 6 months prior to filing
• Must attend a debtor education class post-filing

Filing for Chapter 7 bankruptcy in California has other requirements that may change as bankruptcy rules and regulations change. Provided that individuals meet these requirements and follow all instructions by the local bankruptcy court and trustee, many types of debts can be completely discharged. However, some debts cannot be included- such as tax debts and student loans. To find out whether you qualify for a Chapter 7 bankruptcy in California and to see what debts you can eradicate, contact a local bankruptcy attorney near you.

State bar associations, the American Bankruptcy Institute and the Association of Consumer Bankruptcy Attorneys are all great places to start.