Things to Know about Chapter 7 Bankruptcy
Making the decision to file for chapter 7 bankruptcy can be difficult and stressful, especially when you are already stressed enough with the daily and hourly phone calls from creditors. In the right circumstances, filing for chapter 7 bankruptcy can improve your quality of life by eliminating debt that you are incapable of repaying. But like everything in life, this comes at a cost. Before filing for chapter 7 bankruptcy in Nevada, it is important that you have a general idea of what chapter 7 bankruptcy is, what is expected of you before, during and after the proceeding and how a chapter 7 discharge will affect your current and future financial life.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is an asset liquidation proceeding in which the proceeds from the sale (liquidation) of non-exempt assets is distributed to creditors by a bankruptcy trustee. Governed by the U.S. Bankruptcy Code, chapter 7
bankruptcy is filed in a U.S. court. The court appoints the bankruptcy trustee, who is then responsible for collecting, organizing and overseeing the sale of non-exempt assets, the proceeds of which are paid to the creditors owed. Upon completion of the liquidation, the debtor is given a discharge, releasing the debtor from the obligation to pay any specific outstanding debts to the creditors. There are some debts, called non-dischargeable debts, which are not discharged from a chapter 7 proceeding. A bankruptcy attorney can guide you through the process of determining which debts are dischargeable under the provisions of chapter 7 bankruptcy.
What Do I Need to Do Before I file for Chapter 7 Bankruptcy?
The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act requires that you receive credit counseling from a nonprofit credit counseling service within 180 days prior to filing for chapter 7 bankruptcy. The credit counseling provision was enacted to help determine the eligibility of individuals filing for chapter 7 and determine the right alternatives to filing for bankruptcy if you don’t qualify.
The credit counseling service will help you to determine if you qualify for chapter 7 under the “means test” of the Bankruptcy Abuse Prevention and Consumer act. The means test is designed to ensure that your income is low enough to proceed with chapter 7 filing. If you do not qualify for chapter 7, you may need to file for bankruptcy under chapter 13.
Once you have undergone credit counseling, you can file a bankruptcy petition with the bankruptcy court. A chapter 7 bankruptcy attorney can aid in the organization of financial information, the means test determination and the filing process and act on any problems that may arise in the proceedings.
Effects of Chapter 7 Bankruptcy.
Ultimately, the goal of filing for chapter 7 bankruptcy is to reduce your debt burden as much as possible. Bankruptcy should only be initiated if the benefits of doing so outweigh the potential negative effects. While filing for chapter 7 can wipe out a large percentage of your debts, your future financial maneuverability may be affected considerably. A chapter 7 bankruptcy will be reported on your credit score for 10 years, limiting your borrowing capacity and potentially causing problems when applying for jobs. However, if you are considering bankruptcy as the only option to rid yourself of debt, your credit score is probably already significantly damaged. In this case, the debt relief provided by a bankruptcy filing may significantly outweigh the marginal negative impact to your credit score.
A Bankruptcy Attorney Can Help
While the bankruptcy process can be initiated by anyone, the complexities of the proceedings can be overwhelming to anyone not familiar with the law. The services provided by a bankruptcy attorney ensure that the preparation, filing, and proceedings of your bankruptcy case results in a beneficial outcome for your financial situation.
Chapter 7 Bankruptcy with Kalicki Collier Law Firm
If you need help filing for chapter 7 bankruptcy in Nevada or California, the Kalicki Collier Law Firm team is ready to provide you with chapter 7 legal service. We will help you through all the legal minutia and procedural concerns and see your case through to discharge in a timely and cost effective manner. Contact us today to get started on the path to financial stability.