Chapter 7 Bankruptcy — Xenia Dayton

At Ferguson Legal Group, LTD, we are dedicated to helping you explore your bankruptcy relief options. We recognize that many people feel anxious about filing for bankruptcy, and we’re here to answer your questions, address your concerns, and support you through the process.

Chapter 7 is the most commonly filed bankruptcy. People generally will look to Chapter 7 when they have suffered some major medical injury, have lost a job, are having wages garnished, or are simply struggling to make ends meet, or they have several creditors suing or threatening to sue them, or are facing a foreclosure of their home or a repossession of a vehicle. The basic idea behind Chapter 7 is to eliminate unsecured debts and allow you to get a fresh start financially. In a typical Chapter 7 case, your unsecured debts are wiped out and are not repaid to creditors. Unsecured debts are those debts where you have not pledged your property as collateral to obtain a loan or make the purchase on credit. Examples include most credit card bills, medical bills, signature loans, and money judgments against you. Whatever the specifics of your situation may be, we’re here to guide you through the process and achieve the relief you seek.

Benefits of Filing for Chapter 7 Bankruptcy

There are several benefits to filing for Chapter 7 bankruptcy relief, such as:

• It’s quick—there are no lengthy plan payments to follow
• Your unsecured debts are discharged in 4-6 months
• Your credit card debts are erased
• Your medical bills are erased
• You can retain your home, car, and other personal property
• Temporarily suspends a foreclosure action against your home
• Civil lawsuits or judgments against you are stopped and/or dismissed
• Stops all wage garnishments and bank account attachments
• Stops creditors from continuing to make harassing calls about your debts
• No repayments to unsecured creditors or debt consolidation agencies
• You can even discharge reinstatement fees assessed by the BMV
• Can qualify for new credit almost immediately after filing

Potential Drawbacks to Chapter 7 Bankruptcy

Of course, there are also a few drawbacks and limitations to pursuing Chapter 7 bankruptcy relief. For instance:

• Secured creditors can continue with a foreclosure or repossession of your property after requesting and receiving permission or “relief of stay” from the bankruptcy court
• The bankruptcy remains on your credit report for 10 years
• You cannot discharge most student loans, income tax liens, child support arrearage, or alimony obligations
• You can only receive a Chapter 7 discharge once every 8 years
• You have to pay all your attorney fees and filing costs before filing
• You may have to pay something to unsecured creditors if you have non-exempt equity in a property
• You may have to give up all or part of your tax refund(s)

Exploring Your Bankruptcy Relief Options

We understand that most people consider bankruptcy as a last resort option. However, many times bankruptcy is either the only option or the cheapest option in the end. You have four basic options when you find yourself in financial distress:

• Do nothing about the debts and hope they go away (they never do)
• Try to negotiate your debts with your creditors (typically they won’t)
• Retain a debt broker or debt consolidation agency to devise a repayment plan for paying off your debts (You’ll spend more money than you need to, and if you miss a payment during this type of repayment plan, you are terminated from the plan, and your creditors are free to legally pursue you for the debts. Your creditors can also “1099” you for any debt they did not collect on, and you will have an IRS tax obligation to pay).
• Consult a bankruptcy attorney and file bankruptcy (Filing bankruptcy is not cheap, but when compared to making monthly debt consolidation payments over many years, you will have avoided paying thousands more in the end by filing bankruptcy).

Guiding You Through the Filing Process

Once you have determined that you need or should file bankruptcy, you need to file what is referred to as the “petition.” The petition is made up of various documents designed to list and itemize your income, expenses, assets, liabilities, creditors, as well as certain financial transactions over the last two years.

After your petition is completed and filed, you will be assigned a Judge and Trustee and receive your 341 hearing date, which will be held 30-45 days from the date your petition was filed. The 341 hearing is a meeting for the creditors and the trustee to ask you questions about your petition, your current income, and if there have been any changes in your situation since filing for bankruptcy. Creditors hardly ever show up for the hearing. You are under oath when you are attending this hearing. A typical hearing lasts 10 minutes.

If your petition has been properly prepared and filed, the 341 hearing should be the only hearing you have to attend. After that, if no creditor objects to your petition, you should receive a discharge between 90-120 days after the 341 meeting. If a creditor does object, or even if the trustee files an objection to something in your petition, the issue is usually resolved without having an additional hearing or delay.

At Ferguson Legal Group, LTD, our goal is to help you receive the fresh financial start you need to enjoy a brighter future. Get in touch with us today to explore your bankruptcy relief options.