What Is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is designed to help eligible individuals and some business owners discharge unsecured debt and get a clearer financial reset when repayment is no longer realistic. It can be a powerful tool, but it is not the right fit for every situation, and the risks, exemptions, and case strategy matter.
Janus Law helps clients evaluate whether Chapter 7 is the right move, what property may be protected, how the trustee process works, and what debts may or may not be discharged. The firm is led by Larry Simons, a Certified Bankruptcy Specialist who also serves on the Chapter 7 trustee panel, giving clients guidance informed by real experience with how Chapter 7 cases are reviewed and administered.
What Happens When You File for Chapter 7 Bankruptcy?
Filing for Chapter 7 bankruptcy places a temporary stay on your debts. Creditors will no longer be able to collect payments, garnish your wages, foreclose on or evict you from your home, repossess property, or turn off your utilities.
A trustee is appointed in each case, whose function is to liquidate (or sell) nonexempt assets.
Are There Certain Debts That Cannot Be Discharged by Chapter 7 Bankruptcy in California?
Yes, some examples include:
- Child support
- Alimony
- Student loans
- Certain tax debt
- Court fees and penalties
- Personal injury debts incurred while driving drunk
- Unsecured debts that were omitted from your initial filing
Talk to a Bankruptcy Attorney Right Now
Schedule An Appointment To Get Started.
What Is the Role of a Trustee?
The court-appointed trustee's will review your finances and oversee your Chapter 7 bankruptcy. The trustee reviews your assets and will sell properties that are non-exempt from liquidation (see more below). The proceeds will be used to pay-off your debts.
Will I Lose My Home or My Car?
Real and personal property is protected by laws called exemptions. In California, only non-exempt property can be claimed by the courts. Consulting with a certified specialist will ensure that your assets are protected.
Over 95% of filed Chapter 7 cases do not have property subject to liquidation by a trustee. Janus Law will review your financial situation so that you will know if any of your assets are subject to administration, and whether you should file for Chapter 7.
Will My Credit Be Destroyed If I File for Bankruptcy?
Filing for bankruptcy can be the most efficient way to improve a dismal credit score. Each month you miss a payment to a lender, your credit score takes a hit. Filing for Chapter 7 bankruptcy will cause your credit score to drop in the short term, but building it back up will likely be easier than trying to do so with the weight of your debts hanging around your neck. A Chapter 7 bankruptcy can stay on your credit report for up to 10 years, but it allows you to rebuild your credit from scratch.
Did you Know? Bankruptcy was provided by our country's founding fathers in the constitution.
Will My Reputation Ever Recover?
Unless you choose to tell someone that you have filed for bankruptcy, it is unlikely that anyone will ever know. While bankruptcy filings are a matter of public record, they are not publicized.
Is Chapter 7 Bankruptcy Right for You?
If debt has overtaken your life, filing for Chapter 7 bankruptcy can allow you to retake control. However, bankruptcy is not the right call for everyone. It is sometimes possible to settle with creditors out of court.
You are eligible for Chapter 7 bankruptcy if you file as an individual, a sole proprietor, a partnership, a corporation or other business entity. However, if you are a business owner and you would prefer not to close your business and liquidate assets, you should consider Chapter 11 bankruptcy. Sole proprietors may also qualify for Chapter 13 bankruptcy, which gives the debtor the opportunity to create a payment plan and settle their debts.
If your monthly income is greater than the California state median, you will have to pass a “means test” to determine eligibility. The means test is intended to weed-out cases that abuse the Bankruptcy Code. If your monthly earnings are above the state median, you may have to file under Chapter 13.
How To Choose an Attorney to Represent Your Bankruptcy Case
Filing for bankruptcy is an arduous process for a layman, and your case could be dismissed due to technicalities or small errors. When you work with an attorney, you have the peace of mind that comes from an expert handling your case.
An attorney’s job is to identify potential risks in your filing, and to make the process as painless as possible. Let us do the dirty work so you can focus on your next steps.
Latest Tips
What to Do If You Were Served With a Debt Lawsuit in California
Bankruptcy Mistakes to Avoid Before Filing in California
Bank Levy vs. Wage Garnishment in California: How Bankruptcy May Change the Pressure
Don’t Wait Another Minute
to Resolve What Keeps You Up at Night
Filing for bankruptcy isn’t something to be ashamed of – it’s the first step towards regaining control of your financial life. Speak with one of our bankruptcy Certified Specialists right now and see whether Chapter 7 Bankruptcy is right for you.