Chapter 7 Bankruptcy is what people typically envision when they think of bankruptcy in the plain English sense of the term. This type of bankruptcy is also variously referred to by terms like “consumer bankruptcy”, liquidation bankruptcy” and “liquidation”. A debtor who successfully utilizes the Chapter 7 Bankruptcy process can eliminate most unsecured debt. The Chapter 7 Bankruptcy process theoretically involves the Bankruptcy Trustee liquidating your assets to pay your creditors though in many Chapter 7 cases no assets are taken and distributed to creditors.
As a practical matter, most bankruptcies that we file on behalf of people in the Scottsdale area result in the client keeping all or most of their property because we can help our clients use effective asset protection strategies. Anyone filing Chapter 7 Bankruptcy in Scottsdale has a choice of exemption schedules – the federal schedule of exemptions and the Arizona exemption schedule. Though the exemptions under both the federal and state systems are similar, there are differences so it is important to determine which exemption system will allow you to maximize your asset protection. Our experienced Scottsdale bankruptcy attorneys also view the bankruptcy process as an important asset protection tool. We often help our clients with issues, such as the timing of filing for bankruptcy in relationship to recent transactions or lawfully converting non-exempt assets into exempt assets to obtain the maximum value from the exemption system.
For you to be eligible for a Chapter 7 bankruptcy in Scottsdale, your income must be under the medium income for those in Arizona or you must establish that after paying secured debts and necessities, you will not have sufficient disposable income left to pay any portion of your unsecured debt. While this financial analysis can be complex, our experienced Scottsdale bankruptcy attorneys regularly advise clients regarding their ability to satisfy the means test and obtain a Chapter 7 Bankruptcy discharge. The purpose of the means test is to prevent those with high incomes from obtaining a Chapter 7 Bankruptcy discharge. If your income is above the median income for Arizona or your income is sufficient so that you would have disposable income to pay toward unsecured debt (i.e., credit cards, medical bills, etc.), you may be required to file a Chapter 13 Bankruptcy and make payments over a 3 to 5 year term.
If you qualify for a Chapter 7 Bankruptcy in Scottsdale, you will be required to take an approved consumer credit counseling course. An important part of the process is to complete your schedules of assets and debts, which also lists all your creditors. It is essential that your Chapter 7 Bankruptcy petitions and schedules be completed accurately. If a creditor is not listed in your Chapter 7 Bankruptcy filing, any discharge may not be effective against that creditor. Other errors can result in your Chapter 7 Bankruptcy eventually being dismissed.
Typically, you will appear at a 341(a) Meeting of Creditors, which is a semi-formal proceeding. The name of the meeting is really a misnomer because creditors rarely appear at this meeting except for a representative from your mortgage company if you own a home. If you have not already done so you will need to provide your driver’s license, tax returns and other supporting documentation. The trustee may ask a few questions but if your bankruptcy paperwork is completed correctly by an experienced Scottsdale bankruptcy attorney this hearing usually goes relatively smoothly.
A Chapter 7 Bankruptcy discharge results in most of your unsecured debt being discharged. The unsecured forms of debt that are discharged include but are not limited to the following
While creditors generally must stop all attempts to enforce debts and all collection efforts of any kind once your Chapter 7 Bankruptcy has been filed, your unsecured debts will not officially be extinguished until your receive your Chapter 7 discharge. Our Scottsdale Chapter 7 Bankruptcy law firm are available to answer your questions and guide your through the process.