BottomLine Lawyers

Chapter 7 Bankruptcy

Reputable Bankruptcy Attorney in Auburn, California

Often, bankruptcy has a more negative connotation. But if you are in a dire financial situation and your life has turned upside down because of endless debts, bankruptcy can only be your way out. It may seem unappealing to others but it can be your only chance to start over.

Before you proceed in filing for a Chapter 7 bankruptcy, you need to understand how it can impact your life. Although it can erase your debts, it can have a decade effect on your financial credit score. You can also lose your properties in the process. 

Understanding the implications of the bankruptcy process before you begin is necessary.  And to help you assess how bankruptcy can affect your life at present and in the future, you need to seek legal aid from a competent chapter 7 bankruptcy attorney in Auburn, CA. Learn how we can help you understand the bankruptcy process and evaluate your options. Contact us now!

Why do I need a Bankruptcy Lawyer in California?

It is easy to look for bankruptcy lawyers but it’s hard to search for bankruptcy attorneys who are dedicated to their craft, remain on top of their game, and have significantly proven experience to help you go through the process with ease. 

Bottomline Lawyers has been helping thousands of clients get debt relief and financial freedom. To ensure we provide “outside the box” and innovative solutions to our clients, we take every case seriously and understand how unique each case is. We do not provide a one size fits all option, we ensure that all your needs and concerts have tailor-fit solutions. Our solid experiences and track record in bankruptcy cases enable us to speed up cases and achieve favorable results. 

Your bankruptcy case is unique and you need an Auburn-based bankruptcy law firm that can understand and address the uniqueness of your situation. Speak to us now and let’s begin the journey to your new life!

Chapter 7 Bankruptcy

chapter 7 bankruptcy attorney auburnChapter 7 bankruptcy is commonly known as liquidation bankruptcy.  It eliminates or wipes out debts through the liquidation of your nonexempt assets. The process is simpler and faster compared to other types of bankruptcy. And it is usually the go-to bankruptcy, especially for individuals who do not have significant assets.

After filing for Chapter 7 bankruptcy, automatic stay protection will take effect and your nonexempt assets and properties will be placed under the bankruptcy estate. Afterward, the court will appoint a bankruptcy trustee to oversee your case. The trustee will be in charge of selling your assets and distributing the proceeds to your creditors according to the bankruptcy laws and rules. 

Chapter 7 bankruptcy wipes out most of your unsecured debts however there will be some debts that are not considered eligible. This bankruptcy does not require a repayment plan, unlike Chapter 13 bankruptcy. After the trustee completes the sale of your assets and distribution of proceeds, you will be declared free from your debts. 

Dischargeable and Non-dischargeable Debts in Chapter 7 Bankruptcy

Although Chapter 7 bankruptcy can erase your debts, not all debts are eligible for wipe out. To help you qualify, below are the eligible and non-eligible debts under Chapter 7 bankruptcy law. 

Dischargeable Debts 

  • Credit card bills including overdue and late fees
  • Collection agency accounts
  • Medical bills
  • Personal loans from employers, family, and friends
  • Overdue utility bills
  • Repossession deficiency balances
  • Car accident claims
  • Business debts
  • Money owed under lease agreements and past due rents 
  • Civil court judgments
  • Unpaid taxes including old tax penalties 
  • Attorneys’ fees
  • Government overpayments, including veterans assistance program, welfare, and social security

Non-dischargeable Debts 

  • Alimony and child support obligations
  • Student loans 
  • Debts to former spouse or child if arose out of divorce or separation
  • Government agencies debts for fines and penalties
  • Personal injury debts caused by intoxication
  • Any unscheduled debts (not included in the initial bankruptcy filing)
  • Cooperative housing fees or homeowner association fees 
  • Debts owed to certain tax-advantaged retirement plans
  • Recently incurred tax debts
  • Legal fees in child custody and support cases
  • Court penalties and fines including criminal restitution

Non-dischargeable  Debts if Creditor Objects

  • Cash advances
  • Credit card purchases for luxury goods
  • Incurred debts due to willful and malicious injury
  • Debts resulted from fraud or false pretenses

While it is possible that Chapter 7 bankruptcy is your only way out to achieve financial freedom, it is not absolute. Because there will be non-dischargeable debts, you need to learn how it works and if Chapter 7 is actually suitable for you. Contact us for a free consultation with a credible Chapter 7 bankruptcy lawyer in Auburn now!

Chapter 7 Bankruptcy Exemptions

In Chapter 7 bankruptcy, your assets and properties will be categorized between exempt and non-exempt. Properties that are labeled as necessities of modern life will be exempted. All properties that will not fall under that category are considered nonexempt and will be liquidated by the trustee. 

The state of California has two separate kinds of exemptions, namely Exemption System 1 (704 Exemptions) and Exemption System 2 (703 Exemptions). 704 Exemptions are suitable if you have substantial home equity. On the other hand, 703 Exemptions should be your choice if you do not own real properties and only want to protect personal properties.

You can decide to use either 704 or 703 exemptions, but you cannot mix and match between the two. If you are not sure which exemption system works best for you, talk to an Auburn chapter 7 bankruptcy attorney to help you assess the properties you own and which you want to protect.

Chapter 7 Bankruptcy Exemptions in Auburn 

Assets and properties considered as a necessity for living and working under the bankruptcy law include but are not limited to

  • Homestead exemption

  • Personal properties
    • Household items and personal items
    • Residential building materials for home repair or improvement
    • Jewelry, heirlooms, and works of art up (only up to a certain amount)
    • Health aids 
    • Bank deposits  (only up to a certain amount)
    • Bank deposits from social security payments  (only up to a certain amount)
    • Personal injury and wrongful death support  (only up to a certain amount)
    • Cemetery and burial plot 
  • Motor vehicle exemption 
  • Pension and retirement 
  • Public Benefits
  • Unemployment and disability benefits
  • Union benefits due to labor disputes 
  • Workers’ compensation benefits
  • Public assistance benefits 
  • Relocation benefits
  • Student financial aid
  • Tools of trade (includes tools, implements, books, materias, uniforms, instruments, commercial vehicles, equipment, and furnishings)
  • Insurance 
    • Life insurance 
    • Health or disability insurance 
    • Fidelity bons 
    • Homeowners insurance 

Chapter 7 Bankruptcy Non Exemptions in Auburn 

Nonexempt assets or properties you can’t keep under the Chapter 7 bankruptcy code include but are not limited to

  • Second home or vacation homes 
  • Second truck or motor vehicle 
  • Family heirlooms
  • Valuable item collection like stamps, artworks, coins, antiques, etc 
  • Expensive musical instruments unless they are tools for trade 

Chapter 7 Bankruptcy Means Test

Not everyone can qualify for Chapter 7 bankruptcy. For you to become eligible, you have to pass the means test. The means test limits who can file under Chapter 7 bankruptcy by testing if you have enough income to pay your creditors. Means test assesses your income relative to the state of California’s median income considering the size of your household. High-income individuals are commonly disqualified and are referred to submit a repayment plan under Chapter 13 bankruptcy instead.

How Does Chapter 7 Bankruptcy Means Test Work?

In order to assess if you pass the means test, compare your current monthly income to California’s state median income. Your current monthly income can be computed by getting your gross monthly income for the last six months before you filed for bankruptcy multiplied by two. If your income is less than your state median income, you are eligible to file for Chapter 7 bankruptcy. 

If your income is more than the median, you should not lose hope. You still have a second chance to qualify. The next step you need to do is identify your disposable income. You can arrive at your disposable income by deducting your allowed monthly expenses from your current monthly income. 

Here are some of the allowed deductions you can take. You can use the actual cost for some of your expenses like child support, education expenses, etc, while you need to use the national and local standards for some like food, housing, and clothing. 

  • Food and clothing
  • Housing expenses 
  • Utility bills
  • Transportation expenses
  • Taxes
  • Involuntary salary deductions
  • Life insurance
  • Family support – alimony and child support obligations 
  • Education expenses 
  • Health care expenses and medical bills

If you have little to no disposable income, you can qualify for the Chapter 7 filing but if your disposable income is high, Chapter 7 will not likely be an option for you. You will instead be referred to Chapter 13 bankruptcy. Your high disposable income can be used in paying off your creditors under the Chapter 13 repayment plan. 

Chapter 7 Bankruptcy Qualification in Auburn

Having mountain high debt and seeking a debt-free life does not mean you already qualify for Chapter 7 bankruptcy. There are certain qualifications you need to meet before you achieve a clean slate. You can consult with an experienced Auburn-based bankruptcy attorney to help you tick each qualification box.

  • Complete a credit counseling course from an approved credit counseling agency within 180 days before filing for the bankruptcy petition. Here’s a list of approved credit counseling agencies in California. 
  • Pass the Chapter 7 bankruptcy means test (if you failed the means test, you still have an option to file for Chapter 13 bankruptcy)
  • You have not filed Chapter 7 bankruptcy during the past eight years 
  • You have not filed Chapter 13 bankruptcy during the past six years 
  • If you filed for Chapter 7 or Chapter 13 bankruptcy case and it has been dismissed, wait for at least 181 days before attempting to file again 
  • Make sure you are not trying to defraud your creditors. File for bankruptcy in good faith. If the bankruptcy court or your bankruptcy trustee found out you are acting in bad faith, your case will be dismissed. 

Best Time to File for Chapter 7 Bankruptcy

Declaring bankruptcy is not easy and evaluating when is the best time to file is equally hard. A thorough evaluation of your financial situation is needed. Try to ask yourself these questions and if you answered yes to the majority of them, it’s likely the right time to file for bankruptcy.

  • Are you paying your credit card debts in full? Or are you only making minimum payments? 
  • Are you receiving bill collector calls regularly? 
  • Do you use your credit cards to pay for basic necessities? 
  • Have you considered or currently considering debt consolidation?
  • Are you thinking of selling your properties to pay your debts? 
  • Do you have higher bills than income? 
  • Do you have bills you cannot pay off? 
  • Are you at risk of repossession and foreclosure? 
  • Can you still keep track of all your debts?
  • Has your debts and all those creditors’ calls impacted your life severely? 
  • Did your relationships with your family or friends suffer because of your debts?
  • Is your monthly income below Auburn, California state median income?
  • Is filing for bankruptcy the only way out for you right now? Have you evaluated other options?

Timing is also crucial in determining when is the best time to file for bankruptcy. Your actions and transactions before submitting your bankruptcy petition will play a big factor in your case. Your petition might be thrown out of court if you did any of these before filing your bankruptcy case. And you should consider delaying your case if you are in these situations. 

  • Mortgage modification
  • Purchased luxury items on credit 
  • Availed cash advance
  • Hid assets or cash 
  • Paid some creditors more than what the bankruptcy code allows before filing
  • Transferred assets to someone else’s name 
  • Gifted properties or gave them away to someone  
  • Sold assets for less than what it’s worth
  • Have an anticipated debt (this anticipated debt may not be covered by your bankruptcy petition if you filed early)

After careful considerations and your final resolve is to file for Chapter 7 bankruptcy, it is strongly recommended that you consult a bankruptcy lawyer in Auburn immediately. Getting the steps done correctly will save you time and help you get financial freedom the soonest! 

Chapter 7 Bankruptcy Process Duration in Auburn

Compares to Chapter 13 bankruptcy, the entire process for Chapter 7 bankruptcy is simpler and quicker. From the first credit counseling to receiving the bankruptcy court discharge decision, it only takes about four to six months.

Chapter 7 Bankruptcy on Credit Report

Filing for Chapter 7 bankruptcy will give you a fresh start by wiping out your unsecured debts. As much as it can provide you with a new beginning, it can also leave a negative mark on record.  Chapter 7 bankruptcy will stay on record and hurt your credit score for 10 years from the filing date. 

On a positive note, the effect of your bankruptcy filing on your credit score can diminish over time especially if you manage to keep yourself financially responsible. If you want to learn how to rebuild your finances after Chapter 7 bankruptcy, you can seek legal aid from a well-rounded bankruptcy lawyer in Auburn California. See for yourself how we can help you improve your credit score in no time. 

Basic Steps in Filing for Chapter 7 Bankruptcy in Auburn, CA

Chapter 7 bankruptcy in Auburn allows people to have a second chance in their financial life by wiping out their debt. It is generally the easiest and quickest type of bankruptcy and if you will follow these basic steps, you may find yourself getting bankruptcy discharge in just a few months.

Prepare your bankruptcy documents

One of the keys to a smooth filing bankruptcy process is having all your documents ready. It will save you time from running back and forth to secure paperwork needed by the bankruptcy law. Here are a few of the key documents you need to prepare beforehand. 

  • Basic personal information including proof of identification, social security number, and home address 
  • Income documentation
    • Employer details 
    • Pay stubs during the last six months before filing bankruptcy 
    • Last two W-2s
    • Social security funds
    • Disability benefits 
    • Rental properties 
    • Year-to-date profit and loss statement (two full years before filing) for self-employed 
    • Bank statements of businesses 
  • Tax returns
  • Real estate and fair market value proof
  • Motor vehicle titles, proof of value, and insurance paperwork
  • Bank accounts, investment accounts, retirement, and other similar accounts
  • All your assets and properties
  • All your debt and creditors 
  • Proof of alimony/child support obligations 
  • Credit counseling certificate
  • All recurring monthly expenses, including rent, mortgage, childcare, groceries, etc

Attend credit counseling course 

Attend and complete a credit counseling course from an accredited credit counseling agency within 180 days before filing for California Chapter 7 bankruptcy. Completing a credit counseling course is mandatory. Your completion certificate is one of the requirements needed when filing bankruptcy. 

Fill out your Chapter 7 bankruptcy paperwork & file your case 

The bankruptcy forms will require disclosure of all your financial information. You need to list all your assets and properties, allowed exemptions, creditors, income, latest transactions, and other financial transactions. 

You also need to pass the means test. If you passed the means test, you would not need to fill out the rest of the bankruptcy forms. But if your income is above the state median, you need to complete all the bankruptcy forms to compute your disposable income. 

Filing bankruptcy has a corresponding bankruptcy filing fee. Depending on your income, you can ask permission from the bankruptcy court to pay in installments or request a fee waiver. 

Submit additional information requested by your bankruptcy trustee

After filing the bankruptcy petition,  an injunction commonly known as “automatic stay” will be imposed against your creditors. Your creditors are no longer allowed to chase after you to collect payments. Also, all your properties that are considered nonexempt will now be under the bankruptcy estate. 

The bankruptcy court will appoint a bankruptcy trustee to evaluate your petition. You need to cooperate with your trustee as they verify your bankruptcy documents. They may request additional support documents, recent transaction proofs, and other paperwork missing during your filing. Make sure to submit any additional information they need to ensure the smooth progress of your bankruptcy case. 

Attend your meeting of creditors or 341 hearing

Around 21 to 60 days after filing your bankruptcy petition, you will receive a notice from the bankruptcy trustee to appear in a meeting of creditors, also known as 341 hearing. 

During the 341 hearing, your bankruptcy trustee will confirm your identity, put you under oath and verify all the information provided in your bankruptcy forms. Your creditors will also be invited to attend but in most bankruptcy meetings of creditors, they rarely attend. 

Your trustee and your creditors will ask questions to confirm your financial circumstances and if you are lying in your declarations. It is necessary, to be honest, and transparent during the questioning. You do not want your trustee and creditors to think that you are acting in bad faith and want to defraud them. 

Attend your debt education course 

Within 60 days after your 341 hearing, you are required to attend and complete a debt education course from an accredited debt education agency. The debtor education course is different from the credit counseling course. It is more of a financial management course that you need to undergo before getting a discharge. It aims to teach you strategies that will help you rebuild your finances and stay financially healthy.  

Wait for your bankruptcy discharge notice 

Bankruptcy discharge decision notice in California Chapter 7 bankruptcy is usually released within three to four months after your 341 hearing and submission of debt counseling completion certificate. 

Chapter 7 bankruptcy only discharges your unsecured debts, the bankruptcy law does not cover your secured debts. If you have nondischargeable debts, you still need to continuously pay for them. 

After receiving your bankruptcy discharge notice, you can now breathe and enjoy your new life free from debt worries. 

Call our Chapter 7 Bankruptcy Attorney in Auburn, California Now!

Filing Chapter 7 bankruptcy can be overwhelming. On top of that, it can be financially, emotionally, and physically draining. But despite that, the end result of the bankruptcy process can help you get your back life and give you a chance to rebuild it in a healthier way.

At Bottomline Lawyers, we can guarantee you that you will never face this daunting process alone. The bankruptcy process is scary but only if you are not guided and represented by trustworthy and seasoned bankruptcy lawyers. We commit to offering a multi-disciplinary approach to your needs and concerns. And you can be assured that your case is in good hands. 

Other than bankruptcy, Bottomline Lawyers also provide services for estate planning, tax resolutions, and veteran benefits. If you know anyone who needs legal services in these areas, we can be their best help. 

We take your problems as ours. Give us a call now and learn how Bottomline Lawyers can be your best option in achieving the fresh start that you desire! 

BottomLine Lawyers

Facing Bankruptcy or other financial matters? We can help!

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Facing bankruptcy or other financial matters? We can help!

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