Qualifying for Chapter 7 Bankruptcy

Chapter 7 bankruptcy relief is only available to people who meet certain eligibility criteria, and it can sometimes be difficult to determine if you qualify. This bankruptcy option is usually reserved for individuals who are struggling to maintain living expenses and can consequently no longer make minimum payments on credit cards, medical bills, personal loans, and/or business loans. In other words, you may qualify for Chapter 7 bankruptcy if you have little to no disposable income.

A variety of factors will influence your Chapter 7 bankruptcy eligibility, including:

• Charitable contributions
• Daycare Expenses
• Dependents
• Expenses
• Income
• Secured Debts
• Support for Family

Our team can help you complete the California Means Test and assess whether you are eligible for Chapter 7 relief. This will involve comparing your current average income for the preceding six months to the state’s current average median income for your household size. If your income is less than the average median, you almost certainly qualify for Chapter 7 bankruptcy. 

If your income exceeds the median, you will need to calculate your disposable income by subtracting qualifying expenses from your total income. The resulting amount is too high, you may not qualify for Chapter 7 bankruptcy and instead may need to file for Chapter 13 bankruptcy. 

In some cases, individuals with significant business debts can qualify for Chapter 7 bankruptcy regardless of their income level. Only an experienced bankruptcy attorney can determine if an individual qualifies for such relief.

Our West Los Angeles Chapter 7 bankruptcy attorneys will assess your eligibility and advise whether filing will be the most effective means of reducing and eliminating your debts. If you do qualify, we will walk you through what the process entails and what you should expect. 

How Chapter 7 Bankruptcy Works

We endeavor to provide our clients with a full-service approach to bankruptcy representation. When we agree to proceed with your case, we will petition the appropriate court on your behalf and complete all necessary paperwork. 

Upon filing, you will receive immediate relief in the form of the automatic stay. This court order prohibits creditors from initiating or continuing any collection actions against you. Any pending foreclosures, repossessions, collection lawsuits, and garnishments will be temporarily halted, and the automatic stay typically remains in effect until your case has concluded.

Once your bankruptcy petition has been processed, you will be scheduled to appear at a bankruptcy hearing. At this meeting, the trustee assigned to your case will review your paperwork and circumstances to ensure that you filed your case in good faith. One of our attorneys will attend this mandatory hearing with you and give you the confidence you need to present your case without hesitation or delay. 

Before you can receive a debt discharge, any non-exempt assets will need to be liquidated to compensate creditors. Liquidation may sound frightening, but you can exempt and protect many types of property, including equity in your home, your vehicle, your retirement accounts, wages, government benefits, furniture, clothing, tools of your trade, and other types of personal property. 

We are extensively familiar with state and federal exemption schedules and can help you maximize available exemptions. Many Chapter 7 filers lose little to nothing to liquidation.

Once liquidation has been completed and the trustee signs off on your case, your remaining unsecured debts will typically be discharged within three months of your hearing. Unsecured debts include credit card debt, medical debt, personal loans, and unpaid utility bills. It is important for you to understand that certain debts cannot be discharged through bankruptcy and will still require timely payments, including your mortgage, car loan, spousal support obligations, and student loan obligations.