At ARM Lawyers, helping people get relief from overwhelming debt is one of our passions. If you find yourself facing mounting bills and feeling trapped under the burden, talk to our Chapter 7 bankruptcy lawyer.
Our Chapter 7 bankruptcy attorneys have more than 100 years of combined legal experience, and over that time have helped many people eliminate their debt and get a fresh financial start. We encourage you to talk to us about options. You no longer have to run from your debt — we can help you take control.
Should I consider Chapter 7 bankruptcy?
It may be time to consider Chapter 7 as a debt relief tool if:
- You qualify under the means test.
- You have not received a Chapter 7 bankruptcy discharge in the last eight years
- Your income is such that it is unlikely that you would ever be able to pay back the debts
- You have very large medical bill debt, credit card debt or are having trouble paying your mortgage
- You do not need any of the special features available in Chapter 13 bankruptcy
Some of the immediate benefits of Chapter 7 bankruptcy include stopping creditor harassment via letters and calls, stopping wage garnishments and halting foreclosure proceedings, at least temporarily. Most of these cases are finished in about 90 days, which means most people quickly receive a clean slate and can start moving forward rebuilding their financial lives.
If you would like to estimate Chapter 7 bankruptcy qualification under the means test, you can do so by taking the Chapter 7 means test calculator below.
Is debt consolidation better than bankruptcy?
Almost never. We get this question so frequently that we covered the topic on Bankruptcy Basics. Many people are scared of bankruptcy because of the myths and misconceptions that seem to circulate. In almost every case, bankruptcy is better than debt consolidation or debt settlement. Don’t believe me? We’ll breakdown bankruptcy vs. debt consolidation and bankruptcy vs. debt settlement for you.
What does Chapter 7 bankruptcy do to my credit?
We actually discuss the credit impact of bankruptcy in more depth in our article “what does bankruptcy do to my credit?” Bankruptcy can actually help your credit score! Many times people avoid bankruptcy because they are concerned about negative credit score impact. If this is holding you back, it shouldn’t.
Not only can bankruptcy help your credit score, but if you file bankruptcy with our office, we do more than simply help you eliminate your debt. We will work with you to rebuild your credit score after bankruptcy! All of our clients receive free access to “7 Steps to a 720 Credit Score”.
What debts are dischargeable in bankruptcy?
In a Chapter 7 bankruptcy, almost all debts are dischargeable. There are only a few exceptions. For example:
- Domestic Support Obligations (child support, spousal support, alimony);
- Equitable Distribution under a Divorce Decree;
- Criminal restitution or criminal fines;
- Civil judgments related to driving under the influence or DUI;
- Certain taxes (some taxes are dischargeable);
- Fraud;
- Student loans.
Only an experienced Chapter 7 bankruptcy lawyer can advise you on whether your specific debts are dischargeable. If you have questions, call us.
Can Chapter 7 bankruptcy lower my car payments?
Yes! In some situations, we’re able to “redeem” your vehicle. That means that you are able to refinance the loan at the car’s value rather than the amount of the loan. This is important because cars depreciate quickly. You may have purchased a car recently for $30,000 that is now only worth $15,000. In a Chapter 7, we can redeem the vehicle and refinance the loan with a $15,000 principal balance. We have helped our clients save THOUSANDS on their car loans in Chapter 7.
Moreover, refinancing your vehicle loan in a Chapter 7 actually helps you to rebuild your credit after bankruptcy!
What are the Chapter 7 income limits?
All bankruptcy filers must complete a “means test”. This will determine if you are eligible for Chapter 7 bankruptcy or must instead file a Chapter 13 bankruptcy. The means test involves an analysis of your entire financial situation. Our attorneys will help you prepare a detailed accounting of all debts, income, and assets.
What is the Chapter 7 means test?
There are two parts to the means test. The first determines whether you are over or under median income for you county of residence. This number is based not only on where you live, but also on the number of people in your household. This number can also change throughout the year. If you would like to know if you are income-eligible for a Chapter 7, you should contact us to discuss.
If you are under median income for your household size and county, you are income-eligible for a Chapter 7.
Can I qualify for Chapter 7 if I am over median income?
Yes! If you are under median income, you income-qualify for a Chapter 7, but that’s not to say that you’re not eligible if you’re over median income. If you are over median income, we simply need to move on to the second part of the means test. This second part considers your debts and expenses such as mortgage or rent payments, car payments, etc.
Many of our clients are over median income and still qualify for Chapter 7. The only way to know for sure is to contact our Chapter 7 bankruptcy attorneys for a free bankruptcy consultation. Our experience with the means test allows us to make sure we take every possible deduction to make sure you qualify for Chapter 7 when appropriate.
What if my income is too high for Chapter 7 bankruptcy?
That’s ok. Some people think that Chapter 7 is the only type of bankruptcy or the best type of bankruptcy. The truth is that Chapter 7 and Chapter 13 each have their own benefits and drawbacks. If your income is too high for a Chapter 7, you may need to file a Chapter 13 bankruptcy. This can have a number of advantages for you. Many times we can file a Chapter 13 bankruptcy and save you even more money than if you filed a Chapter 7! How is this possible? Chapter 13 allows us to do a number of things that we cannot do in a Chapter 7. For example, we can strip second mortgages or homeowners association dues. We can have certain debts like equitable distribution payments discharged. We can reduce car loan interest.
Contrary to what you may have heard, you may even be able to file a Chapter 13 without paying back any unsecured creditors! The only way to determine whether you will make out better in Chapter 7 or Chapter 13 is to talk to an experienced bankruptcy attorney.
Chapter 7 bankruptcy process
What happens after I file a Chapter 7 bankruptcy? From the time you file the bankruptcy petition, you will be protected by the “automatic stay”. This protects you from collection activity of any kind unless and until the creditor gets permission from the court to proceed.
About four to six (4 to 6) weeks later, you will have your 341 Meeting of Creditors which is an opportunity for you to meet the Chapter 7 Trustee. In most cases, this meeting is only about 3-5 minutes long. A Chapter 7 bankruptcy lawyer from our office will be there with you. If all of your assets are exempt, the trustee will file a Report of No Distribution signifying that he intends to close the case.
In order to receive a Chapter 7 discharge, you will need to complete your Debtor Education Course.
If you’d like to know more about what happens after you file a Chapter 7 bankruptcy, we have a more detailed analysis here.
