Chapter 7 Bankruptcy
Filing for bankruptcy is an important decision, and Sagaria Law, P.C. wants to make sure that the type of bankruptcy protection that you choose is the right one for you.
Generally, a debtor's major interests in a chapter 7 case are to retain exempt property and obtain a discharge that covers as many debts as possible. A discharge releases the debtor from personal liability for discharged debts and prevents the creditors owed those debts from taking any action against the debtor, or his or her property, to collect payments.
Chapter 7 bankruptcy, also known as liquidation bankruptcy, is a federal court process that liquidates your debts. Both individuals and businesses can file for Chapter 7 bankruptcy, and they must file at the bankruptcy court assigned to the area where they live or where their company is located.
For example, a Palo Alto-based company filing a Chapter 7 bankruptcy must file at the California Northern Bankruptcy Court. An individual who resides in the city of Carmel must also file at the California Northern Bankruptcy Court. With divisional offices in San Jose, Santa Rosa, Oakland, and San Francisco, the California Northern Bankruptcy Court serves individuals and companies throughout the Bay Area.
In both cases, a trustee is appointed by the court to liquidate certain assets that belong to the debtors to pay off as many of their debts as possible. Unlike other bankruptcy filings, a Chapter 7 bankruptcy does not require a repayment plan. Filing a Chapter 7 bankruptcy is an opportunity for an individual to get a fresh start and be discharged of credit card and other kinds of unsecured debt. An automatic stay is issued once a debtor files for bankruptcy that immediately stops lawsuits filed by creditors, as well as any other actions that others might try, such as foreclosure, eviction, and the shutting down of utilities.
For Individuals Filing Chapter 7 "Consumer" Bankruptcy:
Since October 2005, a new bankruptcy law has added new requirements to the bankruptcy process for individuals who wish to file. One of these requirements is passing the means test. In California, the current median income is:
Single Earners: $43,107
A Family of Four: $70,172
The debtor's average income for the last six months is compared to their state's median income. If the debtor passes the means test (meaning that their income is equal to or less than this median), then he or she is allowed to file for Chapter 7 bankruptcy. If the debtor doesn't pass the means test, they may be asked to file under Chapter 13 bankruptcy. Individuals filing for Chapter 7 or Chapter 13 bankruptcy must take a credit counseling course within 180 days prior to filing for bankruptcy protection.
For Companies Filing Corporate Bankruptcy Under Chapter 7:
When a company files for bankruptcy under Chapter 7, the company ceases all operations and shuts itself down. Unlike Chapter 11 Bankruptcy, no reorganization plan is put into place and the company is not allowed to continue doing business. An appointed trustee is tasked with liquidating the business's assets to pay its debts. Secured creditors are paid off first, followed by unsecured creditors, and stockholders are only paid if the other creditors are paid off completely. The bankruptcy law regarding the scope of a chapter 7 discharge is complex, and debtors should consult a competent legal attorney prior to filing.
If you are filing for Chapter 7 bankruptcy protection, it is important that you understand your different options, and, should you choose to file, you will want to make sure that all your legal documents are in order so that your case does not get thrown out, certain assets are protected, and your debts will be taken care of.
Our attorneys at Sagaria Law, P.C. will work with you to get through your Chapter 7 Bankruptcy. We are a debt relief agency, and we help people and companies file for bankruptcy. CONTACT US ONLINE, OR CALL US AT 1-866-447-8460 TO SCHEDULE A CONSULTATION. WE HAVE OFFICES IN SAN JOSE, FREMONT, REDWOOD CITY, AND SACRAMENTO.