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Chapter 7 Attorney Los Angeles, Woodland Hills, Encino, Tarzana, Chatsworth and the entire San Fernando Valley

What is Chapter 7?

Chapter 7 Bankruptcy claim is the commonest form of bankruptcy in the United States and is part of the Bankruptcy act which governs the liquidation process in the United States. Under the Chapter 7, most debts incurred by individuals are forgiven (or discharged). Through the Chapter 7 bankruptcy claim, debtors are given a chance to get rid of a large chunk of their debts and begin their financial life on a clean slate. While it makes quite a whole lot of sense to have your debts discharged, there are also some disadvantages which includes the loss of property and a low consumer credit ranking. The Chapter 7 bankruptcy claim, which is also known as liquidation is a process through which a debtor’s assets are sold off and the proceeds resulting from the sale of these assets are then disbursed to the creditors and the debtors then become free from their debts. Before the advent of the BAPCPA Amendments, debtors of all incomes could file for bankruptcy under Chapter 7 but with the amendment, there has been a great restriction to the number of debtors who could declare Bankruptcy (Chapter 7). The Chapter 7 bankruptcy claim, which is also known as liquidation is a process through which a debtor’s assets are sold off and the proceeds resulting from the sale of these assets are then disbursed to the creditors and the debtors then become free from their debts. Before the advent of the BAPCPA Amendments, debtors of all incomes could file for bankruptcy under Chapter 7 but with the amendment, there has been a great restriction to the number of debtors who could declare Bankruptcy (Chapter 7). With the amendment, a method to calculate a debtor’s income has been set out. This method, which is simply, but widely known as the means test is used to make a comparison between the amounts of the debtor’s annual income to the overall median income of the debtor’s state of residence. If the debtor’s income after it has been calculated by the means test is above the median income amount of the debtor’s state, the debtor stands unable to be qualified for a Chapter 7 bankruptcy claim.

Eligibility for a Chapter 7

As an experienced Attorney Los Angeles, Woodland Hills, Encino, Tarzana, Chatsworth and the entire San Fernando Valley, I always let my clients understand that to be eligible for a chapter 7 bankruptcy filing; a debtor has to go through a number of processes, one of which is the means test. Before a debtor can be subjected to a means test, he/she is required to attend any financial counseling program in any agency approved by the United States Trustee Agency. The program will run for a period of six months after which a certificate will be issued to the debtor which would enable him/her file for a Chapter 7 bankruptcy claim as this is a major requirement in processing an application for the Chapter 7 bankruptcy claim

Advantages of a Chapter 7 Bankruptcy Claim

The advantages accruing from a successful filing for a chapter 7 bankruptcy claim are numerous. That is the reason why in Arizona, over 80% of bankruptcy claims filed was under the Chapter 7. A major advantage of filing for a chapter 7 bankruptcy claim is that the amount of debt that a debtor can overwrite is not limited and this is the reason why it is the most sought after amongst debtors. A second advantage is that any unpaid balances that are owed after the assets must have been sold and distributed are overwritten. Thirdly, any salaries or wages you earn or properties you acquire after you have filed for bankruptcy are yours, and cannot be touched by the creditors or the bankruptcy court. Fourthly, the whole case is often over between a period of 3-6 months, thereby giving the debtor a chance to more quickly get out of under the strain or burden of debt.

Disadvantages of a Chapter 7 Bankruptcy Claim

The disadvantages and consequences emanating from filing for a chapter 7 bankruptcy claim are usually far reaching but not always grim. The first major disadvantage is that you are liable to lose any of your non-exempt property which will be sold by the trustee, and its proceeds distributed to your creditors. A second disadvantage is that some debts tend to survive the whole processes and can be collected after the case must have been closed. An example of such debt is the mortgage liens. A third disadvantage is that filing for the chapter 7 type of bankruptcy can be done just once in eight years. Finally, filing for a chapter 7 bankruptcy is capable of damaging your credit rating for a long period of time.

Filing for a Chapter 7 Bankruptcy Claim: Processes Involved

To begin the process for filing for a chapter 7 Bankruptcy claim, certain procedures have to be followed first. Due to the abuse of the Bankruptcy law by consumers, the Bankruptcy Act was given a major face lift by the Congress in the year 2000, and signed into law in 2005. The reason for the reform was due to a serious lobbying by banks and creditors to make it more difficult for debtors to get away with their debts as it had been under the previous law. With the changes made to the Bankruptcy Reform Act, the rule becomes more stringent and harder to get a Chapter 7 Bankruptcy claim. The Bankruptcy reform Act that was given a major face lift in 2005 now requires debtors to carry out a few processes before the courts can decide if they are eligible or not. First, of all the processes, according to expert Attorney Los Angeles, Woodland Hills, Encino, Tarzana, Chatsworth and the entire San Fernando Valley experience is that the debtors have to fill out a petition and a few various forms with any bankruptcy court around their area. Basically, these forms will be asking to know of the properties owned by the debtors, the current annual income earned by the debtors and an average of the expenditures and living expenses made every month. Also, their debts, nature and amount of debts will be asked in the forms, the properties they own that the law allows to be exempted should also be stated in the forms. Any properties owned by you during the last two years, either sold or given out should also be included in the form. After filing for bankruptcy, an automatic stay on your property comes into play. This stay stops creditors from taking any properties that belong to you. A means test will then be taken to decide if you would be eligible for the Chapter 7 bankruptcy or not. The means test is a test that is used to compare your income with that of your state median income. If your income is greater than the median income of the state, then your application for a Chapter 7 will most likely be turned down or converted into a Chapter 13 bankruptcy claim. Meanwhile, if it is lower than that of the state, you are more likely to be granted a Chapter 7. After the application has been successfully granted, the bankruptcy trustee then looks for any of your non-exempt properties to sell off so as to raise money to settle some of your debtors. In most cases, it’s hardly possible to get any non-exempt properties. At the end, your debts are discharged by the courts, and you get to begin your financial life on a cleaner slate. What you need is a good Chapter 7 Attorney Los Angeles, Woodland Hills, Encino, Tarzana, Chatsworth and the entire San Fernando Valley. We are a debt relief agency with the sole purpose of helping people file for bankruptcy relief under the Bankruptcy Code. Call a Los Angeles-area lawyer dedicated to helping people wrap up debts and get a fresh start. E-mail the Leventhal Law Group, P.C. or call 818-347-5800.

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