Chapter 7 Bankruptcy
Chapter 7 bankruptcy can erase your unsecured debt. Many people turn to chapter 7 bankruptcy to eliminate credit card debt, medical bills and personal loans. Chapter 7 bankruptcy can also erase repossession debt and certain judgments. Furthermore, old income tax debts can be discharged in chapter 7 under certain circumstances. However, not everyone is eligible for chapter 7 bankruptcy. If your current monthly income is too high and you cannot pass the means test you cannot file chapter 7 bankruptcy. To learn whether you qualify for chapter 7 bankruptcy call our office for a free phone consultation.
What Debts Can You Eliminate in Chapter 7 Bankruptcy?
Chapter 7 bankruptcy can eliminate your personal liability for certain unsecured debts. Some of the most common debts that can be eliminated in chapter 7 bankruptcy include:
- Credit Card
- Payday loan
- Personal loan
Student loan debts are very difficult to eliminate in bankruptcy. Furthermore, recent tax debts often cannot be discharged as well as child support or alimony debts. Debts incurred by fraud also cannot be eliminated in bankruptcy. To find out if your debts can be discharged in bankruptcy call our lawyer for a free consultation.
Do I Qualify For Chapter 7 Bankruptcy?
To qualify for chapter 7 bankruptcy your annualized current monthly income as determined by your average income over the past 6 months cannot be higher than the state median income for a household of your size. If you income exceeds this threshold you will have to pass the means test which allows you to deduct certain standardized deductions from you income as well as certain allowed expenses. Monthly expenses that can help you pass the means test include secured debt payments (mortgage and car payments), child care expenses, tax obligations, child or alimony support payments, and out of pocket healthcare expenses. Unfortunately, the means test does not allow you to deduct all of your actual monthly expenses from your income; you can only deduct certain expenses. Therefore, if your annualized current monthly income exceeds the California median income for a household of your size you will need to hire a bankruptcy attorney to perform the means test to determine whether you qualify for chapter 7 bankruptcy.
Will I Lose My Property In Chapter 7 Bankruptcy?
Probably not. Most cases are “no asset” cases, meaning that the value of all the property reported on the bankruptcy schedules is protected by state exemption law. For instance, if you do not own a home you will probably use the California 703 exemption scheme. In that event you can exempt (protect) up to $5,100 of the equity in one or more motor vehicles. If you own one car worth $5,000 that one car would exempt from liquidation since you can protect it’s entire value using the $5,100 exemption. Fortunately for debtors the state of California provides two very favorable exemption schemes. As a result, many Roseville residents can protect all their property in chapter 7 bankruptcy.