What is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy is the type of bankruptcy that most people have in mind when they think about bankruptcy. It is the “clean slate” bankruptcy that gives many people the most debt relief. However, certain rules apply, which means that not everyone qualified to file a Mesa Chapter 7 bankruptcy, and not all debts can be discharged in the bankruptcy.

Unsecured Debts

What is a Mesa Chapter 7 Bankruptcy? When you file for Chapter 7 bankruptcy, your unsecured debts are discharged. That means that your legal obligation to pay them is cleared, and they are listed as “discharged in bankruptcy” on your credit report. Unsecured debts include credit cards, medical bills and some types of personal loans.

Most people are able to keep their secured debts, such as their home loans and their car loans. Many people are concerned about losing their house or car when filing for bankruptcy, so this provision is welcome news to most. Certain criteria must be met to retain these debts, such as falling under a threshold for equity.

Secured debts may be discharged in Chapter 7 bankruptcy, as well. Though student loans can be discharged in exceptional circumstances, these debts must typically be honored.

Eligibility for Chapter 7 Bankruptcy

Not everyone is eligible to file for Chapter 7 bankruptcy. Certain qualifying criteria must be met, including income limits.

The “means test” for Chapter 7 bankruptcy is a bit complicated. Your monthly income is determined by taking an average of your income over the previous six months. Your monthly living expenses are determined by a standard set by the courts, not your actual living expenses. These expenses are subtracted from your monthly income to determine your disposable income.

If your disposable income is higher than the median income in your state, you don’t qualify for Chapter 7 bankruptcy. Basically, the court views any amount over this median as evidence of some ability to repay your debts. You would then be encouraged to file for Chapter 13 bankruptcy, which establishes a new debt repayment plan for you.

Filing for Chapter 7 Bankruptcy

Anyone can file for bankruptcy with the courts. All you need to do is submit the right paperwork. However, filing bankruptcy on your own is highly unadvisable. Any mistake in your paperwork could lead to stiff penalties, including jail time. With the complex formulas and rules involved in a Chapter 7 bankruptcy, it is easy to make a mistake.

Only working with a Mesa bankruptcy lawyer can ensure that you file the paperwork properly while also protecting your legal rights. You can be sure to get the debt relief you need while keeping the assets you want to keep. My AZ Lawyers serves clients in the Mesa Arizona area who are interested in filing for bankruptcy for debt relief. Whether you are looking to file Chapter 7, or you want to explore your full range of options for debt relief, a Mesa bankruptcy lawyer from My AZ Lawyers can walk you through your options and give you advice on the best plan of action for your circumstances and your goals.

Candace Kallen, Attorney at My AZ LawyersPublished By:

My AZ Lawyers

Mesa Location:
1731 West Baseline Rd., Suite #100
Mesa, AZ 85202
Office: (480) 448-9800

Glendale Location:
20325 N 51st Avenue Suite #134, Building 5
Glendale, AZ 85308
Office: (602) 509-0955

Tucson Location:
2 East Congress St., Suite #900-6A
Tucson, AZ 85701
Office: (520) 441-1450

Avondale Location:
12725 W. Indian School Rd., Ste E, #101
Avondale, AZ 85392
Office: (623) 399-4222

2018-03-26T18:40:15+00:00 April 10th, 2014|Bankruptcy|