Law Office of Marc Weitz


Personal Chapter 7 Bankruptcy



A chapter 7 bankruptcy is a fresh start. It begins by filing the bankruptcy petition listing all your assets and liabilities, plus information on income, expenses, and financial situation.

A trustee liquidates your assets to pay off your creditors to the extent that there's money available and then whatever debt remains is discharged. However, bankruptcy wants to give you a fresh start, not leave you bereft in the street, so they've created exemptions that allow you to keep most, if not all of your assets. A bankruptcy attorney is key to making sure you can keep as much of your assets as you legally can and get your debts discharged.

To learn about what assets you can keep, read my blog about exemptions here.



The Automatic stay - relief begins at day one





The best thing about bankruptcy is the automatic stay. It's an injunction that, as the name implies, automatically comes into effect the moment you file the petition. It suspends creditors attempts to collect their debt. It temporarily stops foreclosures and repossessions. Creditors must seek approval from the court to take any action against you.


The stay gives you breathing room and means that your relief begins at day one.



When you can keep your home





There are a lot of rumors floating around regarding when bankruptcy allows you to keep your home. I hear interesting stories everyday. The truth is that you may keep your home if

  1. The payments are current
  2. The home is insured
  3. The amount of equity is within the exemption limit

Let me explain the last one. Equity is the part of your home that you own. It's the value of the home minus the amount owed. For example, your home is worth $400,000. You owe $350,000. That means you own $50,000 of your home. That's your equity. If that equity amount is within the exemption limit (the amount bankruptcy law allows you keep) and you fulfill the other two requirements, then you may keep your home.


Contrary to rumors, this type of bankruptcy does not allow you to rewrite your mortgage.



What debts can be discharged





Most of your debts are eligible for discharge. Most commonly, people are able to rid themselves of

  • credit card debt
  • hospital bills
  • lines of credit
  • personally guarantied debts


What debts cannot be discharged





There are exceptions to what debts cannot be discharged. Here are some examples:

  • student loans (except for extreme-hardship cases)
  • debts procured through fraud or misrepresentation
  • judgments due to DUI
  • taxes


The Process





  • The bankruptcy petition is filed
  • The automatic stay comes into effect
  • A creditors' meeting is held before an appointed trustee
  • Creditors have 60 days from that meeting to object
  • Any non-exempt assets that can be sold will be sold by the trustee
  • If there are no assets, your case is generally closed within a few months
  • You receive your discharge


The 341 Creditors' Meeting





A trustee is appointed to administer your case. Once you file for bankruptcy, a 341 creditors' meeting is scheduled within 4 - 6 weeks. At the meeting, you meet the trustee, and he asks you questions. Depending on the complexity of your case, this anywhere from two minutes to longer. This is when having an attorney to guide you is key. Creditors are allowed to show up and ask you questions. This rarely happens. (Credit card companies have better things to do than show up and ask you questions about debts that are likely dischargeable.) For those times that personal creditors do show, I can help you through it.


If the trustee needs more information, he or she will often continue the meeting to give you a chance to provide more information.


Most of the time, I can predict what will happen at the creditors' meeting and guide you through it.


For more information see my blog on surviving your 341 Creditors' Meeting.



WHY HIRE AN ATTORNEY



If you've read this far, you know that there are a lot of pitfalls and things to know about bankruptcy. I can guide you around those pitfalls and help you get the most out of your exemptions. I know how to legally allow you to keep most of your assets and maximize the discharge.



call or email for a free first consultation





The above is for informational purposes only and does not constitute legal advice. Please seek advice from counsel.


323-600-4805

633 West 5th Street, Suite 2800

Los Angeles, CA 90071


marcweitz@weitzlegal.com




Law Office of Marc Weitz