09 December ,2014 By Admin Category:Bankruptcy

Qualifying for a Chapter 7 Bankruptcy

A Chapter 7 bankruptcy is typically the most desirable bankruptcy for a debtor. It allows you to essentially obtain a fresh start financially by wiping away all debt. However, you must first qualify for a California Chapter 7 bankruptcy. To qualify for a Chapter 7 bankruptcy, the Bankruptcy Code and Federal Law require that a debtor’s household income be within certain limits. An evaluation of one’s financial papers including W2s will help an attorney determine whether you qualify for a Chapter 7 bankruptcy. Of course, the law does get more complex: for example, if you have certain assets that cannot be protected under a Chapter 7 bankruptcy, then those assets may be sold by the bankruptcy trustee to pay off some of your debts.

Exceptions to Debt Elimination

While a Chapter 7 bankruptcy can help you eliminate most debt, there are nonetheless certain debts that cannot be discharged. These debts include, but are not necessarily limited to:

• Federal and State Taxes
• Spousal Support Obligations
• Child support Obligations
• Student loans
• Debts that were obtained using fraudulent means

There may be other debt that is not dischargeable and a qualified attorney can advise you of this during your initial consultation.

Most people who visit a Chapter 7 bankruptcy attorney have a large amount of credit card debt and/or other unsecured debt such as medical bills, and very few assets to offset them with. Most of the time, a Chapter 7 bankruptcy will completely eliminate all eligible debt and will allow you to keep all of your personal items and a fair amount of money.

Reaffirming Secured Debt

During Chapter 7 bankruptcy proceedings, you can request to keep certain secured debts for things such as a car or furniture by “reaffirming” the debt associated with it. This is done by voluntarily signing a reaffirmation agreement. Typically, the only requirement is that the debt be current prior to reaffirming it by making any back payments that are due, including late charges.

Once this agreement has been signed, you will then be unable to discharge that debt through bankruptcy for the next eight years. However, you get to keep the secured asset, such as your car. You must continue to make payments on that debt just as you did before filing for bankruptcy. Keep in mind that you do not have to keep your car in a Chapter 7 bankruptcy; you can instead choose to return it and clean the debt associated with it. If you wish to do so, you can pick and choose what property you desire to reaffirm and which property you do not.

The bankruptcy process can be confusing for individuals looking to get out of growing debt. However, an experienced attorney can help you understand the process and help you solve your financial problems. To find out more about California’s Chapter 7 bankruptcy laws and how you can get rid of your debt, contact Henrik Karapetian an experienced bankruptcy lawyer in Glendale, California.