Ch. 7 Bankruptcy Common Questions
How do I retain an attorney to file for bankruptcy?
The first step is to schedule a consultation with a member of our firm to evaluate which chapter would suit you best.
What are the fees to file ch. 7 bankruptcy?
The court charges a filing fee of $299 and attorney fees are determined at the time of your consultation.
What do I need to provide in order to file a ch. 7 bankruptcy?
When you retain you will be provided with a detailed stage list letter which includes a list of the documentation required. The required documents include:
- Client intake form
- Tax returns for the previous 2 years
- All payment advices for the prior 6 months
- Certificate of Credit Counseling (pre-bankruptcy course)
How do I qualify for a ch. 7 bankruptcy?
The ch. 7 means test uses a formula to calculate whether debtor(s) have the ability to re-pay unsecured creditors a portion of the debt owed from the debtor(s) excess income (deemed by federal standards of necessities). Your income is determined based on your 6 month average prior to filing and gives qualified deductions from your gross income such as income taxes, mortgage payments, and car payments. If your CMI (Current Monthly Income) is below the median household income (deemed by federal standards) you will qualify for a ch. 7 bankruptcy. In California, the current median income is based upon household size as follows:
- 1 person = $49,182
- 2 person = $65,097
- 3 person = $70,684
- 4 person = $79,971
- 5 person = $86,871
- 6 person = $93,771
- 7 person = $100,671
- 8 person = $107,571
What is considered secured debt vs. unsecured debt and how does it affect my filing for ch. 7 bankruptcy?
A secured debt consists of debt secured by collateral such as a home or vehicle. Unsecured debt is a debt not supported by collateral or the amount by which a debt exceeds the value of collateral such as credit card debt. You may elect to keep your home and/or vehicle providing that your payments are current at the time of filing and remain current pursuant to the original agreement with the creditor.
What is a reaffirmation agreement?
A reaffirmation agreement is an agreement between a debtor and a creditor that, in lieu of discharging the debt, renegotiates the terms of said debt. It is most commonly used for secured property in a bankruptcy, such as a car. In a case like that, the lender will send over a proposed agreement that re-affirms that the debtor will continue to make payments on the property, in lieu of the property being liquidated or the debt discharged. All reaffirmation agreements must be approved by the court.
How will a ch. 7 bankruptcy affect my credit?
Bankruptcy filings remain on one’s credit report for 10 years. If one has not been able to pay their bills the credit report will reflect a poor credit score. Upon receiving a discharge, a person is in better standing to pay their current bills and will begin to get new credit and increase their credit score.