Many people are hesitant to seek a bankruptcy solution because they have received bad information about how a Chapter 7 Bankruptcy works. Chandler residents come to us frequently and indicate that they believed that Chapter 7 Bankruptcy relief was now virtually impossible to attain because of the 2005 changes in the Bankruptcy Code. Although it is true that these changes created a “means test”, many people still qualify for a Chapter 7 Bankruptcy or can effectively use a Chapter 13 Bankruptcy to obtain needed relief.
The other reason that many people wait to file a Chapter 7 bankruptcy is because they are afraid, they will lose their property. The reality is that most clients that we represent in a Chapter 7 bankruptcy keep most or all of their property. This is part of what we mean about using bankruptcy as a financial planning and asset protection tool. Many people try to file their own bankruptcy or seek the assistance of a typing service or paralegal and end up filing bankruptcy under the wrong chapter or at the wrong time. Sometimes it is not even advisable to file bankruptcy because your dischargeable debt does not justify filing. We carefully consider these issues so that we can help you maximize the benefit that you receive from the bankruptcy process.
The initial indicators regarding whether a Chapter 7 Bankruptcy makes sense for you is the amount of your unsecured debt and the amount of assets that you have that cannot be protected with an exemption. A Chapter 7 Bankruptcy will permit you to discharge most of your unsecured financial debts, such as unpaid medical bills, hospital expenses, credit card balances owed and other forms of debt not subject to a security interest like your home or car. If you owe $5000 or less in unsecured debt, for example, it may not make economic sense for you to file a Chapter 7. There may be better alternatives that allow you to save the one Chapter 7 Bankruptcy discharge that you are allowed every 8 years. If you have substantial unsecured debt, then a Chapter 7 Bankruptcy may be a sensible option if you do not have significant assets that cannot be protected with exemptions that permit property to be retained in bankruptcy.
The 2005 changes to the Bankruptcy Code imposed an income qualifying criterion as a prerequisite to obtaining Chapter 7 Bankruptcy relief. We now perform a financial analysis for anyone in Chandler seeking bankruptcy relief to determine if they qualify for Chapter 7. This requirement means that a person planning to file a Chapter 7 must satisfy a means test. There are really two elements to the means test. The first level of analysis is to evaluate a debtor’s income during the six-month period prior to filing bankruptcy to determine if the person’s average income exceeds the median for Arizona. If your income does not exceed the Arizona median income, you qualify for a Chapter 7.
If your income does exceed the median for Arizona, then our law firm will conduct an analysis to determine if you have sufficient disposable income after paying your monthly living expenses and secured debts to pay a portion toward unsecured debt. If you are determined to have enough to pay a portion toward unsecured debts, then we may have to file a Chapter 13 Bankruptcy which will involve a repayment plan. The means test necessitates a thorough financial analysis to ensure that you seek the bankruptcy option that will provide the best option for your situation.
If you file a Chapter 7 Bankruptcy in Chandler, you will be required to participate in a credit counseling class. Once we file your bankruptcy, you will typically receive a Chapter 7 discharge within a few months (usually 3-5). The Bankruptcy Trustee will send a notice shortly after your bankruptcy has been filed notifying you of the one quasi-formal hearing that you must attend. This hearing called the “341 meeting of creditors” is an opportunity for the Trustee to ask you information about the information in your bankruptcy paperwork. Most of the time this meeting is brief and will be uneventful unless you have not had an experienced Arizona bankruptcy attorney prepare your bankruptcy packet. It is rare that an unsecured creditor will appear at the 341 meeting.
Once you have received a Chapter 7 bankruptcy discharge, you will obtain relief from virtually all unsecured debts allowing you to obtain a “fresh start.” There are limited types of unsecured debts that may not be eliminated in bankruptcy, but our experienced Chandler bankruptcy attorneys offer a free initial consultation so that we can review all your debts and determine and advise you regarding any unsecured debts that are not dischargeable or assets that cannot be protected by a bankruptcy exemption under either the Arizona exemption or federal exemption schedule.
The Chandler bankruptcy lawyers at Stone Rose Law are committed to providing effective bankruptcy solutions to those who qualify for Chapter 7 Bankruptcy. We provide customized bankruptcy solutions to our Chandler clients so that they can reduce financial pressure caused by excessive debt and protect their valuable property.