The filing of a Chapter 7 Bankruptcy petition sometimes referred to as a “straight bankruptcy” has one simple goal; Complete release from debt (s). Some of these debts may include credit cards, medical bills, matters of pending litigation and possibly judgments, which have previously overwhelmed you, often to the point of despair.
The entire Chapter 7 process takes approximately 100 days to complete. Immediately upon filing, phone calls and correspondence from your creditors immediately cease and all collection efforts are halted. Filing is done electronically from the law office as soon as we have completed the Bankruptcy petition. Once the Bankruptcy filing is completed, an Automatic Stay immediately takes effect thereby “freezing” any/all collection action by your creditors. All contact with you by your creditors immediately ceases. This includes telephone calls, correspondence, pending lawsuits and any debt collection activity, such as wage executions. As the Automatic Stay is a legal provision of the Bankruptcy Code, there are no “ifs, ands, or buts” about it.
Upon completion, a Chapter 7 Bankruptcy will discharge your unsecured debts and in certain instances, also Federal and State income taxes owed. However, it will not release you from child support obligations or student loan debt (s).Better still, a Chapter 7 Bankruptcy will give you a fresh start, allowing you to re establish your credit in a surprisingly short period of time. The logic of this is simple: (1) You cannot file another Chapter 7 Bankruptcy for 8 years, (2) You now have little or no debts (unsecured anyway), and (3) presumably you have now learned to live within your means. However, there are some initial hurdles which must be addressed to ensure a successful Chapter 7 Bankruptcy filing;
In an effort to avoid debtor abuse, Congress drafted an income “means test” determination for every Bankruptcy application. Simply put, if your family income is less than allowable deductions and is over a set limit, a Chapter 7 filing may not be available to you. As the definitions of income and allowable deductions are somewhat complicated, and the “means test” is tricky to apply, an office consultation is necessary to make this determination properly. Additionally, if you have substantial equity in your primary residence, you may not be eligible to file a Chapter 7 without risking loss of your home. Again, the formula for this is tricky and will be addressed in your initial office consultation. In the event either of these hurdles cannot be successfully negotiated, the filing of a Chapter 13 petition may be an alternative.
Lastly, in order to file for Bankruptcy, you must also have filed, but not necessarily paid, your Federal Income Taxes Returns for the current year and two years prior. You must also complete a Credit Counseling session from an approved provider. This can be done online and takes approximately 20 minutes to complete.