What is Chapter 7 bankruptcy? Chapter 7 is the most popular type of bankruptcy in Sacramento. And for good reason. Chapter 7 gets you a fresh start and eliminates your unsecured debt.
Chapter 7 is what you think of when you hear the word “bankruptcy.” If you qualify, the bankruptcy court will discharge nearly all of your debt. This gives you a fresh start and an opportunity to start over with your finances.
This type of bankruptcy is called a “liquidation” bankruptcy. Part of the bargain in Chapter 7 court is that the Bankruptcy Trustee is empowered to liquidate your assets to help pay off your bills. However, for a typical consumer debtor, no property is lost. In fact, in 99% of my Chapter 7 cases, there is no risk of losing any of your property whatsoever.
Chapter 7 bankruptcy will remain on your credit report for 7 to 10 years after you file. However, the main affect on you will be during the first two years after your bankruptcy. In fact, you can qualify for a mortgage loan 2 years after bankruptcy!
Bankruptcy not only gets rid of your debt, but it also stops nearly all legal action against you. If you have a pending lawsuit, bank levy, or even a wage garnishment, Chapter 7 will halt these legal processes immediately. In some cases, I can even force a creditor to return funds garnished from your pay or levied from your accounts prior to your bankruptcy filing.
Chapter 7 is best for individuals with unsecured debts that they can not realistically afford to repay. This is especially true for “problem” debts such as high interest payday loans, credit cards with maxed-out balances, lawsuits, and even EDD overpayments.
Some types of debts are not affected by Chapter 7 bankruptcy. The list is rather small, but the main ones to be aware of are: student loans, domestic support obligations, debts related to DUI accidents, and certain types of taxes. While these types of debts will continue to exist after bankruptcy, you will still get a few months of relief even from these special debts while you are in your bankruptcy.
The bottom line is that Chapter 7 is incredibly powerful and a great way to achieve a fresh start with your finances. Call my office today to discuss what Chapter 7 bankruptcy can do for you. I can be reached at (916) 333-2222.
