Chapter 7 Bankruptcy in San Diego: Learn All About It!
Chapter 7 bankruptcy is a legal procedure whose purpose is to support both consumers and businesses in the liquidation of their debts through the liquidation of non-exempt assets so that in this way, they can solve their problems and thus have new beginnings in the financial field. This is a procedure that can be carried out in San Diego, but also anywhere in the United States.
To find out what Chapter 7 of the bankruptcy law is, which debts are covered by this chapter and which are not, the benefits, the procedure to declare bankruptcy under Chapter 7, and much more, we invite you to continue reading.
What is Chapter 7 of the bankruptcy law?
Chapter 7 of the bankruptcy law is a measure used to liquidate the debtor’s assets to pay creditors and thus have a new beginning. Bankruptcy Chapter 7 can also be used by those companies based in the United States or residents of the country who want to liquidate the resources of their businesses, always under the protection of the Bankruptcy Court.
What debts can be eliminated with this chapter?
Declaring bankruptcy under Chapter 7 allows you to eradicate the following debts:
- Utility bills.
- Medical assistance receipts.
- Credit card debts.
- Personal and car loans.
Which debts cannot be eliminated with this chapter?
The debts to which debt consolidation does not apply are known as “non-dischargeable debts.” Here are some of them:
- Child support.
- Student loans.
- Tax debts that have been recently acquired.
In any situation related to this type of debt, you can request legal assistance from S&B Legal. Our team of professionals can advise you whenever you need it.
How to declare Chapter 7 Bankruptcy in the United States?
After the first appointment with your trusted Chapter 7 attorney, it is necessary to submit these requirements for Chapter 7 bankruptcy:
- A list specifying the names of the creditors and the amount of money that must be paid to each of them.
- Document specifying the amount and frequency with which the income is received.
- List of all properties.
- List of all monthly living expenses (for example: utilities, clothing, housing, food, medications, transportation, among others).
Likewise, you must submit tax returns, as well as recent pay stubs if you have a job.
Afterwards, a bankruptcy supervisor will review all the documents submitted, and then manage the 341(A) Creditors Meeting, in which you will be asked questions regarding your financial situation. But, don’t worry about this process! Your bankruptcy attorney will be with you at all times.
After a few months, you will receive a notification from the court by email in which you will be notified that you have been granted Chapter 7 bankruptcy discharge. It is best to fill out all the forms and make the lists as sincerely as possible; honesty is the key to success when requesting this procedure.
What does it mean to file for Chapter 7 bankruptcy?
People who resort to this measure do so because they do not have the liquidity to honor their respective debts on a monthly basis. Generally, businesses that take this option have previously decided to close their doors.
Regardless of the amount they owe, Chapter 7 bankruptcy will allow debtors to feel relieved. Depending on your situation, a trustee will help you transform your assets into cash to pay the creditor. Once the problem is solved, it is important not to incur new debts, remember that this can affect your credibility in the credit field.
What assets do you lose in Chapter 7?
In a Chapter 7 bankruptcy, also known as liquidation bankruptcy, a court-appointed trustee may sell off your non-exempt assets to pay your creditors, which could include luxury items like jewelry and collections, second homes or vacation properties, high-value vehicles that exceed exemption limits, investments like stocks and bonds, and cash or bank accounts over certain thresholds.
Business assets, such as equipment or inventory owned by a sole proprietor, and valuable personal property like art or antiques might also be liquidated if they aren’t covered by exemptions.
However, you typically can keep exempt property, such as your primary residence protected by a homestead exemption, basic personal items like clothing and household goods, a vehicle if it’s within the exemption limits, retirement accounts like 401(k)s and IRAs, public benefits such as Social Security, and tools necessary for your trade up to a certain value.
The specific items you can retain or lose depend on your state’s exemption laws, and in some cases, you may choose to keep certain secured debts, like a mortgage or car loan, by reaffirming the debt, which means agreeing to continue paying it. Consulting with a bankruptcy attorney is essential to understand how Chapter 7 might impact your specific assets.
Advantages of filing for Chapter 7 bankruptcy
Filing for Chapter 7 bankruptcy in the United States has different advantages; Here are some of them:
Great relief due to the elimination of your debts: after obtaining this measure, the feeling of relief will be fast and imminent due to the automatic suspension of all collection notifications, such as calls, seizures, letters, summons, among others.
You can keep many of your assets: generally, in a Chapter 7 bankruptcy declaration, the person will continue to own many of their belongings, this happens because the law protects them under the name of exempt assets, among these are watches, television sets, monthly Social Security checks, and even their car.
Improvement in your relationship with banks: if you declare Chapter 7 bankruptcy, banks can give you a host of benefits, such as credit cards, which can help you increase your credit score, an action that will provide you with greater credibility in the financial sector.
Who can file for Chapter 7 bankruptcy?
Most consumers whose income is less than the state’s median income can file a petition with the help of their attorney to file for Chapter 7 bankruptcy. To apply for this measure, it is necessary to take the means test, an examination in which the average monthly income obtained in the last six months must be recorded. In addition to this, the size of the home will also be important.
For example, a person with a salary below the minimum wage or who is unemployed may qualify for Chapter 7 bankruptcy. If they do not pass the aforementioned means test, they may apply for Chapter 13 bankruptcy.
Are there differences between Chapter 7 and Chapter 13 bankruptcy?
If you have been looking for information regarding the chapters that cover the declaration of bankruptcy, you have surely asked yourself: What is the difference between Chapter 7 and Chapter 13 bankruptcy? The difference between both chapters is the following:
Chapter 7 bankruptcy is based on liquidating assets so that the respective debts can be paid, while Chapter 13 bankruptcy is about making a payment plan with creditors so that the respective debts can be paid successfully. It is important to keep in mind that only individuals can declare Chapter 13 bankruptcy, while Chapter 7 bankruptcy is a good option for businesses, as well as for individuals.
If you find yourself in San Diego facing financial difficulties, do not hesitate to hire bankruptcy attorneys. For this, you can turn to S&B Legal, we have extensive experience in issues related to Chapter 7 bankruptcy. Contact us today at 760-302-4652 to provide you with the help you need!
