Chapter 7


Chapter 7 Bankruptcy

Individuals generally have two choices in bankruptcy, Chapter 7 and Chapter 13.

CHAPTER 7: A chapter 7 is a liquidation.  The good thing about a Chapter 7 is that it is fast, relatively straight forward and eliminates most of your unsecured debts such as credit cards and medical bills.

The entire Chapter 7 process, from beginning to end, is only 3.5 - 4 months.  If you decide to file, there are forms to fill out.  Unlike every other attorney in Modesto, I do not send you home with a 60-page package of forms to complete.  Instead, I will sit down with you.  I will ask you questions, write down your answers, run your credit and make the process as easy and painless as possible.

I can prepare your Chapter 7 case in 2 days.  Fees for individuals start at $650, but may be higher if you have more than 25 creditors, if you owe taxes or child support, or if you have criminal fines or restitution or similar complications.

You will have to go to court one time.  I will personally be there with you the whole way. 

 

There are four downsides of Chapter 7. 

 

First, it effects your credit.  Although some people find their credit scores actually go up after filing a Chapter 7 case, the record will remain on your credit report for 10 years.  Most people find that they can completely restore their credit within 2 years, and I will explain the best ways to do that.

Second, there are some debts that will not go away in a Chapter 7 case.  These include child support, spousal support, fees, fines, penalties, restitution and student loans.

Third, secured debt does not go away in Chapter 7 unless you surrender the collateral.  That is a fancy way of saying that, if you want to keep your house or car, you have to keep making the house or car payment.  Unlike Chapter 13, I cannot reduce a car payment or help you to catch up if you are behind on a mortgage.  If you no longer want a car or house, it can be surrendered in Chapter 7 and you will be free from the debt.

Fourth, there are limits on what you can earn and limits on what you own.  If your income is too high, or if you have too much equity in houses, cars or other assets, you may lose assets in Chapter 7 case.  In those cases, Chapter 13 may be preferable.

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