Many Americans hold negative preconceptions about bankruptcy, and while this financial mechanism may not be entirely beneficial when it comes to credit score and qualifying for financing, it can be an invaluable lifeline for anyone overcome with debts they cannot repay. There are several ways to file for bankruptcy, but the most applicable for the average person in San Diego is likely to be Chapter 7 bankruptcy.
Through the Chapter 7 bankruptcy filing process, a debtor will be required to sell off any assets they hold to pay off creditors, usually resulting in them paying less than they actually owe. Once they complete the bankruptcy filing process, they are no longer required to repay debts cleared through bankruptcy. This enables them to get out from under insurmountable debt and have something of a fresh start when it comes to their personal finances.
Bankruptcy is a very complex process, and while it is possible to file for bankruptcy on your own, you are more likely to reach a positive outcome in an efficient manner when you have a San Diego consumer protection attorney handling your case. The Law Office of Quintin G. Shammam can provide the comprehensive legal representation you need in this difficult situation. If you want to learn more about how an attorney can help with your bankruptcy filing, contact us today and set up a consultation with our team.
Understanding the Chapter 7 Bankruptcy Filing Process
If you are unsure whether bankruptcy is right for your situation, you should understand that it’s important to explore alternatives to bankruptcy first. For example, a creditor may be willing to negotiate a private settlement for less than you owe, and working with an experienced consumer protection attorney will help you take full advantage of any such options. In addition, debt counseling services may also provide alternatives to bankruptcy.
While bankruptcy is not an inherently bad thing, it will have a tremendous impact on your credit score and overall creditworthiness. It will be very difficult for you to qualify for new types of financing, loans, and lines of credit for several years. Additionally, the Chapter 7 bankruptcy filing process will require you to sell many of your assets, aside from those that qualify as exempt from bankruptcy liquidation.
You must also undergo a means test to assess your overall financial situation, including income and unsecured debts that are not eligible for clearing through bankruptcy. This test reviews your monthly income in comparison to the total amount of debt you are trying to clear. A Chapter 7 bankruptcy case begins when the debtor files a petition with the bankruptcy court along with a complete schedule of their total assets and liabilities, a schedule of their current income and expenditures, a complete statement of their financial affairs, and copies of any of their executory contracts and active leases. They must also provide a copy of their most recent tax return.
Before starting a Chapter 7 bankruptcy filing process, the debtor must complete a debt counseling course and obtain a certificate of credit counseling if they secure any type of debt repayment plan. Married couples may file for Chapter 7 bankruptcy jointly or file separate individual petitions.
Debts Covered by Chapter 7 Bankruptcy
If you believe that Chapter 7 bankruptcy could be beneficial to you and your family, it is important to understand which debts can be cleared by bankruptcy and which are not eligible. Chapter 7 bankruptcy is most often used to clear debts such as:
- Credit card debt. Some credit card companies are willing to go to alternative debt restructuring or private settlement, but credit card debts are some of the most common debts cleared through bankruptcy filings.
- Medical bills. Unpaid medical bills are the leading cause of bankruptcy claims in the United States. Unfortunately, it is very difficult to have any type of medical debt restructured, leaving those who cannot pay these debts no choice but to file for bankruptcy.
- Overdue rent payments. Unpaid rent could lead to eviction and/or a civil suit from a landlord. Once these legal issues conclude, the tenant is still likely to owe their unpaid rent balance. A good attorney can help them clear this debt through Chapter 7 bankruptcy.
- Unpaid car loan balances. If you owe a significant amount of money on a car loan you have already likely had the vehicle repossessed by the time you consider filing for bankruptcy but completing Chapter 7 will release you from your obligation to pay the remaining balance.
- Home mortgages. You will likely need to sell your home to complete the Chapter 7 bankruptcy filing process, but you will be released from liability for the debt.
Keep in mind that to have certain debts cleared, you will need to liquidate assets that you own to pay off creditors as much as possible. However, not all debts are covered by bankruptcy, and you will need to continue repaying those debts after you complete the Chapter 7 bankruptcy filing process. A few examples of debts that cannot be cleared through the Chapter 7 bankruptcy filing process include:
- Any debts pertaining to outstanding spousal support or child support. In general, debts pertaining to family court rulings are never eligible for clearing through bankruptcy.
- Most student loans. There are many debt consolidation and refinancing plans that can work to help a debtor with student loans that cannot be cleared through bankruptcy.
- Tax debts. Any owed taxes must be repaid, and there are ways to restructure tax payments to minimize penalties, but they cannot be resolved through bankruptcy filings.
- Unpaid wages. If you are an employer and owe unpaid wages to your employees, you cannot have these debts canceled through bankruptcy and will need to repay all wages to employees.
- Personal injury damages. If you are found liable for a personal injury, you are responsible for repaying the victim for their damages, and this debt is not eligible for clearing through bankruptcy.
- Government debts and fines. If you owe court fees, fines, or other legal penalties to any government agency, you cannot have these debts canceled through bankruptcy filing.
One of the most important first steps of the Chapter 7 bankruptcy filing process is gathering proof of all your debts and assets before identifying which debts can be cleared through the bankruptcy process. Having an experienced San Diego consumer protection attorney help you will make this much easier and streamline the entire case filing process significantly.
How Your Attorney Can Help
The Law Office of Quintin G. Shammam has years of experience handling all types of consumer protection cases. While bankruptcy will make it more challenging for you to qualify for loans and other financing in the future and the process requires liquidating many assets, it can act as a springboard to better overall financial health in the future.
When you have Attorney Quintin Shammam and his team representing you, you will have a dedicated legal advocate ready to assist you through every stage of the bankruptcy filing process. Our team helps each client understand the complex details of their case as clearly as possible. Bankruptcy filing can be intimidating, but our team will assist you in completing all legal prerequisites and gathering the documentation you will need for the process.
FAQs
Q: How Long Does Chapter 7 Bankruptcy Take to Complete?
A: The bankruptcy filing process usually takes between four to six months to complete. Some variables can make the process take longer, such as submitting incomplete information to the court, and it is also possible to streamline the process by hiring a San Diego consumer protection attorney to assist you.
Q: Are There Penalties for Filing for Bankruptcy?
A: If you are approved in your Chapter 7 bankruptcy filing, all eligible debts will be nullified and you are no longer obligated to repay them. This enables you to restructure your personal budget, and it’s advisable to work with a personal financial consultant so you can avoid going into insurmountable debt again in the future. However, the record of your bankruptcy will likely prevent you from qualifying for certain types of financing and loans in the future. You will need to devote time and energy to rebuilding your credit. You may find that several years of your bankruptcy filing will interfere with your personal credit.
Q: How Much Does It Cost to Hire a San Diego Consumer Protection Attorney?
A: Every attorney has their own billing policy. Most charge their clients an hourly rate, so the more time they spend working on a case, the more it costs the client. Some attorneys offer flat fees for very specific legal services, and attorneys who represent clients in claims for damages often work on contingency. This means that the client does not pay anything upfront and instead parts with a percentage of their total case award to pay their attorney at the end of their case.
The Law Office of Quintin G. Shammam can provide the compassionate and detail-oriented legal counsel you need on your side to approach the Chapter 7 bankruptcy filing process with confidence and peace of mind. Our firm has helped many San Diego clients experience relief from their debts with our bankruptcy filing representation. We are ready to leverage this experience on your behalf. If you would like to learn more about how our team can assist you with your Chapter 7 bankruptcy case, contact us today and set up a consultation with our team.