Are you overwhelmed with debt? You’re not alone. Trillions of Americans are struggling with burdensome debt and wishing that it could all just disappear. Admittedly, it’s not as simple as waving a magic wand, but filing for Chapter 7 bankruptcy may be the best solution for your circumstances. Filing for Chapter 7 bankruptcy often makes sense when you don’t have many assets and it would take years to pay off your debt even when taking extreme measures.
At Tolar & Tolar, Attorneys at Law, we are here for you every step of the way. We specialize in Chapter 13 and Chapter 7 bankruptcy and have years of experience helping people get back on track and giving them a brighter economic outlook.
Starting with the basic definition, here’s what you need to know about chapter 7 bankruptcy:
What is Chapter 7 bankruptcy?
Chapter 7 bankruptcy is one of the most common types of bankruptcy filings in the United States. In fact, it’s the type most people think about when the term “bankruptcy” is mentioned. Generally, chapter 7 is the simplest and quickest form of bankruptcy and is available to individuals, married couples, corporations, and partnerships.
According to the United States Courts, Chapter 7 of the Bankruptcy Code provides for “liquidation,” which is the sale of a debtor’s nonexempt property and the distribution of the proceeds to creditors. Consequently, Chapter 7 bankruptcy is often called “straight bankruptcy” or “liquid bankruptcy.” Chapter 7 is designed for debtors in tough financial positions who do not have the ability to pay their existing debts. Unfortunately, not everyone is eligible for a Chapter 7 bankruptcy.
Who can qualify for Chapter 7 bankruptcy?
To file for Chapter 7 bankruptcy, you:
- Must pass the bankruptcy means test instituted with the 2005 amendments to the bankruptcy code which is a test that looks at your income and compares it to similar household sizes in your area.
- If your household income is under the median for a household of similar size, then you are on your way to qualifying for a Chapter 7. If your income is over the median for a household of similar size, then you are required to fill out additional forms concerning your monthly living expenses to determine if you qualify for a Chapter 7 bankruptcy.
- You cannot have completed a Chapter 7 in the past 8 years or a Chapter 13 bankruptcy within the past 6 years.
The bankruptcy means test evaluates your income, assets, expenses and family size to determine if you have enough disposable income to repay your debts. The means test can be a complicated form to understand, but we at Tolar & Tolar, Attorneys at Law are here to help you navigate through this qualification process.
Usually, debtors who earn below the median income of the State of Alabama for a family of equivalent size are eligible. While some high earners may not qualify if their debts are primarily consumer debts, most people who want to file Chapter 7 can do so with the help of experienced bankruptcy lawyers. At Tolar & Tolar, we can determine if you qualify during our free initial consultation. If you don’t qualify for Chapter 7 bankruptcy, filing for Chapter 13 bankruptcy is a recommended alternative.
If you don’t qualify for Chapter 7 bankruptcy, filing for Chapter 13 bankruptcy is a recommended alternative.
Can I claim property as exempt?
When filing for Chapter 7 bankruptcy, the court appoints a trustee to oversee your case. The trustee’s role is to review your assets (the things you own) and determine if they could sell your assets for a profit so that your creditors could receive a portion of that money to offset the debts that you owe. Fortunately, most assets can be exempted from the court with the help of your attorney. We are experienced in this process and will look over your property before allowing you to file a Chapter 7 so you can keep your property and get the fresh start you are seeking.
How do I file for Chapter 7 bankruptcy?
While these 9 steps may seem daunting, we are here to guide you through the process from start to finish.
- Meet with a bankruptcy attorney at Tolar & Tolar: First and foremost, meet with an attorney to discuss your specific situation and needs. We can work with you to determine the type of bankruptcy that you need to file.
- Participate in credit counseling: Almost every debtor filing for a Chapter 7 case is required to participate in a pre-file credit counseling session with an approved credit counselor before the case can be filed.
- File the required paperwork with the court clerk: Next, we will help you properly file a petition and other necessary paperwork. You will need to gather all relevant documentation of assets, income, and debts.
- You will be appointed a standing trustee: At this point, a court-appointed bankruptcy trustee will begin managing the process and arrange a meeting of creditors.
- Meeting of creditors: During the meeting of creditors, the bankruptcy trustee will ask you various questions about the bankruptcy and your financial affairs. Other creditors have the opportunity to appear and ask you questions about your bankruptcy and finances, as well. If the trustee believes that he or she can sell some of your property for a profit after all of your exemptions are applied, they will do that after this Meeting of Creditors. However, we are here to make sure that you can keep all of the property you desire to keep prior to filing the bankruptcy so that the court does not seize anything that you do not want them taking.
- Your eligibility is confirmed: After the meeting of creditors and reviewing your paperwork, the court will confirm whether or not you’re eligible to file for Chapter 7 bankruptcy.
- Take a financial education course: Before you can receive a discharge, you will be required to take a financial education course from an approved credit counselor.
- Discharge: Finally, if the trustee and the creditors do not object, the bankruptcy court will grant you a discharge. This discharge effectively wipes out your debt by preventing creditors from trying to collect any debt that arose before you filed for bankruptcy.
Why Tolar & Tolar Attorneys at Law?
Chapter 7 is not a do-it-yourself process, so having an attorney is a must. A misstep can cause your entire case to be thrown out, impact the amount of debt that is dismissed, or cause you to lose certain assets to the court that you were wanting to save. At Tolar & Tolar Attorneys at Law, we believe you shouldn’t have to go at it alone, and we dedicate ourselves to making sure you get a fair shake and can keep as much of your life together as possible. We are a family firm, so we value the things that matter most to you. We never want to see someone lose their car or their home, so we do everything we can to help make sure that doesn’t happen.
Learn more about Tolar & Tolar Attorneys at Law
At Tolar & Tolar Attorneys at Law, we have years of experience helping other people get themselves back on track – giving them a new and brighter economic outlook. We would appreciate the opportunity to do the same for you. Let our family help your family!
Serving people in Millbrook, Auburn, Prattville, and Tallassee, we are your local solution to make the tough times easier. Contact us today to set up your free consultation!