Chapter 7 Bankruptcy for Individuals
There are many different types of bankruptcy filings, and Chapter 7 is one of them. What should you expect? Is this the right option for you? Below is some important information you should know before filing.
What is Chapter 7 Bankruptcy?
The underlying principle in filing a bankruptcy is to receive a “fresh start”, in golfing terms, a “mulligan”. Chapter 7 can be filed individually, regardless if you are married or not, or together with your spouse. It entails that the debtor can no longer afford to pay for their financial obligations, so they are looking at having it discharged.
It covers a wide range of debt, from credit cards to medical bills. However, the following are the kinds of debt that cannot qualify for Chapter 7:
- Child support
- DUI conviction
- Fraud charge
- Wilful and malicious injury
What Will a Chapter 7 Trustee Look into?
Chapter 7 trustees appointed to oversee Chapter 7 cases. Aside from going over your responsibilities as required by statute, they are assigned to examine assets that can be sold in favor of the creditors.
Among the things that your assigned trustees will look into are your median income and disposable income, if any. In Arizona, you qualify for Chapter 7 bankruptcy if your total monthly income is less than the median family income for an individual living in Arizona. That number changes every 6 months or so. Median Family income is based on the number of individuals living in your household( the “heads on beds analysis”). Earning above the Median Family Income, may not completely eliminate the possibility of filing a Chapter b7 bankruptcy, but it does mean that there is a Preupmtion of Abuse of the bankruptcy system, thus a second test must be passed in order to file a Chapter 7. Even if you fail that second test, it is still possible to file a Chapter 7 if the facts show that you can rebut the Presumption of Abuse by providing evidence that your income is not actually as high as calculated.
What Does the Process Look Like?
With your help, your attorney will prepare your petition, schedules and statements, and all remaining and necessary documents in order to file a Chapter 7. After receiving these documents together with the filing fee, the court will process it, and you and the creditors you have listed will be given a notice, bearing the date until which they can raise objections to your case. The moment that your case is filed, you are under the protection of the court and the majority of creditors cannot continue or initiate collection efforts for debts (there are exceptions for child support).
A 341 meeting will be set with the Chapter 7 trustees, your party, and your creditors (most creditors, if any, never show up). You will be given a date, time, and venue. After examining your case, it can either be concluded, or the trustee will require other documents.
Although the success rate of Chapter 7 bankruptcy in Phoenix AZ is considerably high, there are still cases when it you will have to go to court. Among the reasons is a creditor might file a complaint against you.
How Long Will it Take?
A Chapter 7 discharge usually takes about 5 months. The discharge can be delayed if you do not cooperate with your trustee. It can also be denied or overturned. The case remain open for some time until the case is closed by the trustee and the court.
To file a Chapter 7 bankruptcy, contact The Law Office of Larry Karandreas. Our expert team will increase your chances of a successful result, and our compassionate approach makes the experience as pleasant as possible. Call us today.