How to Know If You Should File for Chapter 7 Bankruptcy
When you are struggling with debt, it can be difficult to know if you should start thinking about the possibility of a Chapter 7 bankruptcy filing. You might only know a little bit about how bankruptcy works, and you might not be sure if you are eligible, or if it is even an option for you. While any definitive decision to file for bankruptcy should be made with assistance from an experienced bankruptcy attorney, it is also important to learn more about Chapter 7 bankruptcy broadly in order to understand if it could be right for you. So, how can you know if you should file for Chapter 7 bankruptcy? The following are some important considerations from our Irvine bankruptcy attorney.
You Cannot Meet Your Debt Obligations
One of the first signs that you may want to speak with a lawyer about Chapter 7 bankruptcy is that you cannot meet your debt obligations based on your current income and assets. While other options might be possible, bankruptcy may be a way to get a fresh start financially.
You Can Pass the Means Test for Chapter 7 Bankruptcy
You will only want to file for Chapter 7 bankruptcy as an individual (or a married couple) if you can pass the means test. The means test determines whether your income and assets are low enough for Chapter 7 bankruptcy to be reasonable, or not abusive.
Your Debts Are All or Mostly Dischargeable
To know if you should file for Chapter 7 bankruptcy after determining your eligibility, you will need to find out if your debts are all — or at least mostly — dischargeable. Certain types of debts are not dischargeable, and understanding these exceptions will help you assess the effectiveness of filing for bankruptcy in your situation. Most common consumer debts, like credit card debt and medical debt, are indeed dischargeable for most debtors. In addition, discharging student loan debt in a Chapter 7 case recently became easier.
Important Assets Can Be Exempted
California has two sets of bankruptcy exemptions that a debtor can choose from, and the available exemptions will depend on the set you choose. It will be critical to talk with your bankruptcy lawyer to ensure that the property most important to you can be exempted, or will be classified as exempt, in your bankruptcy case. In a Chapter 7 bankruptcy case, non-exempt assets may be liquidated by the bankruptcy trustee. The proceeds from this liquidation are used to pay creditors. Completing this process is a prerequisite for the debtor to qualify for a discharge of eligible debts.
Contact Our Irvine Chapter 7 Bankruptcy Lawyer
Anyone with questions about Chapter 7 bankruptcy for individuals, or anybody who feels ready to file for Chapter 7 bankruptcy, should get in touch with an Irvine Chapter 7 bankruptcy attorney at The Law Office of Charles A. May as soon as possible. A lawyer at our firm can discuss your financial circumstances with you, and we can tell you more about your eligibility for Chapter 7 bankruptcy. Once you are ready to file, we can assist you with your case from planning to filing all the way through your discharge. Contact us today for more information about how we can assist you.
Sources:
law.cornell.edu/uscode/text/11
leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CCP§ionNum=703.140
