Chapter 7 bankruptcy is designed to be a simple and useful form of bankruptcy. Basically, Chapter 7 allows you to "pick" and "choose" which assets and debts to keep ("reaffirm), like vehicles / car payments or a home with a mortgage, and which debts to eliminate ("discharge") like credit card debt, medical bills and so forth. Some debts, however, are not dischargeable in bankruptcy (like recent tax debts, or child support, and most student loans), and some people are not good candidates for Chapter 7 bankruptcy if they have too much income or have too much equity in the assets they need to keep. Those people can generally find relief, while protecting their assets, under Chapter 13 instead of Chapter 7.
Every case is different, so there's no magic formula or answer to this question. That's why we offer a free and confidential consultation to discuss ALL of your options, starting with an emphasis on options that may be available to avoid bankruptcy. Some factors, though, that may tilt the scales in favor of a Chapter 7 bankruptcy include:
- - Whether your assets are completely protected (exempt) in bankruptcy so you can keep them and eliminate debt quickly. (99% of Chapter 7's we file work this way.)
- - Whether there's no way to settle or pay-off credit card debts and loans within the next 36 to 48 months outside of bankruptcy. Consider this: If you owe credit card debt in the amount of $20,000 and assuming the interest rate on that balance is 18%, it takes more than 35 years to pay off the debt. Put that same amount of money monthly in an IRA, and in 35 years, you have a retirement nest egg in the amount of $310,000.
- - If you've lost your job or had an unfortunate medical setback, Chapter 7 is a way to get debt forgiven so you can concentrate on getting back on your feet.
- - If you've been sued or garnished or had a car repossessed, Chapter 7 is a very fast and effective way to stop collection activity so you can start rebuilding your credit again.
- - Chapter 7 is fast. It's typically over after 90 days and only involves 1 short and casual interview with an appointed trustee.
- - Chapter 7 is inexpensive. Typically, the total cost - for everything - is less than $1,500.
- - Chapter 7 may actually be the best and fastest way to rebuild your credit score and qualify for affordable loans on cars and mortgages.
The most important benefit of bankruptcy is the ability to immediately stop creditor collection activity and to obtain a fresh financial start.
Consumers may qualify for a complete discharge of their unsecured debt. Other consumers may benefit from a Chapter 13 that allows them to restructure and catch-up on missed mortgage payments, back taxes, and lower their car payments.
Bankruptcy laws are designed to give you various options, so you're not disqualified for relief if you have higher-than-average income or more equity in your home than can be expempted.
Your employer can not fire you or discriminate against you if they find out that you had to seek bankruptcy relief.
Although court records like bankruptcy filings are available for public access, bankruptcy filings are generally not published, so the matter remains private for the most part.
Creditors expect to write-off a certain percentage of their loans because of bankruptcy, so they typically just write-off the debt when a bankruptcy is filed; it's unusual and difficult for them to object to your lawful right to a bankruptcy discharge.
Bankruptcy is a highly-specialized area of law that can be more complicated than it appears on the surface. It's more than just filling out forms. The issues are case-specific, and not always obvious or simple. That's why it's so important to find an experienced lawyer, like Brian Cahn, who is highly-rated and has exclusively practiced bankruptcy law for the past 27 years.
Although Mr. Cahn's fees are competitive and affordable, price should not be the sole basis for choosing a bankruptcy lawyer. You can not put a price tag on the value of your lawyer's experience, skill, reputation, and empathy.
Pick a lawyer who can help you work through the issues, and discuss alternative available, along with the implications of your choices.
Pick a lawyer with whom you are comfortable, one whom you can ask questions and get responses you understand.
Don't be afraid to interview a lawyer and leave without retaining the lawyer if you feel pressured to file immediately (this is not how we handle consultations at our law office).
In the vast majority of cases, bankruptcy filers never have to step foot in a courtroom.
After filing a bankruptcy, you are required to attend one informal conference called the "meeting of creditors" or the "Section 341 Meeting." In light of Covid-19 precautions, these meetings are currently being conducted telephonically (not in-person), so you'd receive a date, time and teleconference number for your meeting. Of course, your attorney will prepare you for that meeting and will be on the phone with you. An appointed official called a Trustee will preside over that meeting, which usually only takes between 3 and 7 minutes. That's all.
There are time limits between filings, but there is no limit on the number of times you can file. In theory, someone with bad luck or sub-standard debt-management skills could file a dozen or more bankruptcies in their lifetime.
The following summary contains the applicable wait-time to get a discharge in a subsequent bankruptcy:.
Chapter 7 to Chapter 13 - Time Limit
If you were granted your first discharge under Chapter 7, you'll have to wait four years from the Chapter 7 filing date before filing Chapter 13 if you want a discharge. However, you could still file a Chapter 13 sooner than four years, but you'd only get the benefit of the automatic stay, and an opportunity to make payments through a plan to your creditors in relative peace, but you would still owe (after the bankruptcy) any of the debt not paid under the loan terms since there's no discharge..
Chapter 7 to Chapter 7 - Time Limit
Chapter 7 is the quickest way to debt relief, but you can't be a serial filer. You have to wait eight years between filing dates, the longest wait time in the Bankruptcy Code.
Chapter 13 to Chapter 7 - Time Limit
The standard wait is six years, unless your Chapter 13 paid more than 70% of unsecured debt.
Chapter 13 followed by Chapter 13 - Time Limit.
You're eligible for another Chapter 13 discharge as soon as two years after the filing of a previously-discharged Chapter 13.