Understanding Chapter 7 Bankruptcy - Riverside Bankruptcy Law Firm

Chapter 7 Bankruptcy in Riverside County must follow the new bankruptcy laws that have recently gone into effect. While it was true in some years prior that an individual could choose whether or not to file Chapter 7 or Chapter 13 bankruptcy, the law now requires that anyone who files for Chapter 7 bankruptcy must satisfy certain conditions in order to have their case accepted by the courts and ultimately, have their debts discharged. The two main pre-qualifying conditions for Chapter 7 bankruptcy are as follows:

1.       Ability to Repay - Your income will be examined using an established formula to determine whether or not you will be able to repay 25% of "non-priority, unsecured debt" after your necessary expenses such as food, rent, and utilities are paid.

2.       Median Income - Your income will also be evaluated to see whether or not it falls above the median income in your state of residence.

If your income is above the median income in your state of residence, and the court determines that you would be able to repay at least 25% of your non-priority, unsecured debts, then you will not be allowed to file for a Chapter 7 bankruptcy. You can, however, still file for a Chapter 13 bankruptcy and get much of the same financial relief.

If you do qualify for a Chapter 7, understand that during the bankruptcy process, your assets, possessions, and future interest in things such as stocks and trusts will most likely fall under the control of the trustee for the bankruptcy estate. Depending upon which type of exemption you choose, you may lose some property which will be sold in order to pay off your creditors. However, if you have little or no assets of which to speak, Chapter 7 bankruptcy will be a fairly swift, and simple process that will allow you to keep your possessions and have most of your debts dismissed.

Bear in mind, there are certain types of debt that cannot be discharged underneath a Chapter 7 bankruptcy. If your debts are comprised of mostly the following types of debt, Chapter 7 may not be for you:

·         Child Support

·         Student Loans

·         Taxes Owed to the Government

·         Damages Owed as a Result of Intoxication/Other Criminal Charges

Some types of debt that cannot be discharged under a Chapter 7 bankruptcy can be handled via a Chapter 13 repayment plan. If you aren't certain which option is best for you, talk to one of our experienced Riverside County Bankruptcy Attorneys as soon as possible. Our firm is dedicated to helping individuals who are suffering from overwhelming debt to recover and have a fresh start after bankruptcy. Contact us today and arrange for a free case evaluation to allow us to better serve your Riverside County Bankruptcy needs.