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A Path Forward
Debt can accumulate quickly, and before you know it, it may feel impossible to manage. Financial stress can impact both your credit and your quality of life, especially when dealing with persistent creditor calls and collection agencies. Fortunately, even when it seems like there are no options, there may be a path forward.
Attorney Stephen A. Thomas will review your overall financial situation, including your income, assets, and debts, to determine whether Chapter 7 bankruptcy is the right solution for you. You will receive clear guidance and step-by-step support throughout the process, so you never have to worry about deadlines or paperwork.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is a legal process that allows individuals and certain businesses to eliminate unsecured debt and obtain a fresh financial start. In some cases, non-exempt assets may be liquidated by a court-appointed trustee to repay creditors.
The trustee reviews your financial situation, including your assets and debts, to determine whether any property is available for liquidation. However, both federal and state law provide bankruptcy exemptions that protect many essential assets, such as a primary residence, vehicle, and personal property.
Although Chapter 7 is sometimes described as a “liquidation bankruptcy,” most cases are actually “no-asset” cases, meaning the filer does not lose any property. In these situations, eligible debts are discharged without any assets being sold.
Chapter 7 bankruptcy is one of the most common forms of debt relief in the United States. However, not all debts are dischargeable, and not every individual or business will qualify. For these reasons, it is important to consult with an experienced bankruptcy attorney to determine whether Chapter 7 bankruptcy is the right option for your situation.
Do You Qualify for Chapter 7 Bankruptcy?
Qualifying for Chapter 7 bankruptcy typically requires passing the Means Test, which evaluates your income and ability to repay your debts.
Income limits vary significantly from state to state based on the cost of living. These limits also depend on household size and are updated regularly. Even if your income exceeds the median level, you may still qualify after applying allowable expenses and deductions.
Who Should File for Chapter 7 Bankruptcy?
Individuals and certain businesses may be eligible to file for Chapter 7 bankruptcy if they meet specific requirements under federal law.
- Pass the Means Test or otherwise demonstrate inability to repay your debts
- Have not received a Chapter 7 discharge within the past eight years
- Complete a required credit counseling course from an approved agency
- Meet other eligibility requirements under the Bankruptcy Code
Reasons You Should File
- You want a fresh financial start by eliminating unsecured debt
- Your credit score is already significantly impacted
- You have overwhelming unsecured debt, such as credit cards or medical bills
- You are facing foreclosure, wage garnishment, or collection actions
- You are unable to keep up with monthly expenses
- You will not realistically be able to repay your debts within five years
Reasons Not to File
- You have sufficient income to repay your debts over time
- You are current on your obligations and not facing collection pressure
- You want to protect secured property and have significant equity
- You are eligible for alternative solutions, such as Chapter 13 bankruptcy or negotiated debt resolution
How Much Does It Cost to File?
The cost of filing Chapter 7 bankruptcy depends on whether you file on your own or hire an experienced bankruptcy attorney.
Court filing fees are set federally at $338 for Chapter 7. Attorney fees depend on your case. We explain every cost in your free consultation before you commit to anything.
Chapter 7 Bankruptcy Due Diligence Checklist
- Recent pay stubs and/or proof of income for the past six months
- Bank statements for the past 12 months
- Federal and state tax returns for the past four years
- List of all creditors and recent statements
- Credit reports from Equifax, Experian, and TransUnion
- Deeds, mortgages, liens, vehicle titles, insurance policies, and appraisals
- Divorce decrees, domestic court orders, lawsuits, judgments, and liens
What Happens After You File?
After your Chapter 7 bankruptcy discharge is entered, eligible debts are eliminated, providing you with a fresh financial start.
Chapter 7 bankruptcy will appear on your credit report for up to 10 years. However, many individuals are able to begin rebuilding their credit soon after filing, and the impact of bankruptcy typically decreases over time with responsible financial habits.
- You receive a bankruptcy case number from the court
- An automatic stay goes into effect, stopping creditor actions such as wage garnishment, lawsuits, and collection calls
- A bankruptcy trustee is assigned to review your documents, verify your financial information, and oversee your case