Chapter 7 Bankruptcy: A Financial Fresh Start

What is a Chapter 7 Bankruptcy? In a Chapter 7 the court orders your creditors to permanently stop collections and in exchange you give them all non-essential property owned at the time bankruptcy is filed. This gives you a fresh start to acquire future wealth.

Price for a Chapter 7 Bankruptcy? Our fee for a standard Chapter 7 bankruptcy is $1,400.00.  This fee covers all the costs of bankruptcy except the bankruptcy court's filing fee which is presently $338.00.  Therefore the total cost to you is $1,738.00. For a complex Chapter 7 cases with clients earning above median income, who are self employed, or who operate a small business our fee is $1,900.00 (not including the court filing fee of $338.00). 

Price for a Chapter 13 Bankruptcy? To draft and file a Chapter 13 bankruptcy we charge $2,000.00 which includes all fees and costs except the bankruptcy court's filing fee which is presently $318.00.  For work performed after the bankruptcy is filed we charge $2,000.00 which is paid by the Bankruptcy Trustee from monies paid into the plan. 

When must I pay the attorney fee? A nonrefundable $500.00 down payment is required to commence our representation, however we are precluded from drafting your bankruptcy forms or filing your case until the remaining balance is paid in full. The down payment is designed to cover the information gathering portion of our representation and allow you to direct your creditor communications to our office. The balance of the fee must be paid in full within 6 months of the initial fee.

How long will a Chapter 7 bankruptcy take? This is a difficult question to answer. The Automatic Stay is initiated the day your bankruptcy is filed and creditors are temporarily ordered to stop collections.  About 90 days after filing you receive a Discharge that perminantly stops collections.  After discharge your case will close but this could take days to mounts, and on mre complicated cases, years.  

Are some debts not effected by Chapter 7 bankruptcy? Not all debts are discharged in a bankruptcy. These nondischargeable debts fall into two categories:

     Debts automatically excluded from discharge:

• Tax debt less than 3 years old and any debt incurred to pay those taxes;
• Most student loan debt;
• Domestic support debt and obligations to pay debts under a decree of divorce;
• Criminal fines, penalties, forfeitures and restitution;
• Debts not listed in the bankruptcy;
• Debts for death or personal injury caused by operating a motor vehicle while intoxicated;
• Debts that could have been, but were not discharged in a prior bankruptcy;
• Future condominium or cooperative association fees;
• Credit card purchases for luxury items made within 90 days before bankruptcy; and,
• A consumer cash advance for more than $1,000.00 received within 70 days before filing bankruptcy

     Debts that are discharged unless disputed by a creditor:
• Fraud, breach of fiduciary duty, theft
• Willful and malicious injury to a person or property.
 

Can I delay filing Chapter 7 bankruptcy until after my tax refund is received and spent? Yes, but be careful and keep receipts!  Common acceptable expenditures include paying bankruptcy fees as well as current living expenses. You may also purchase exempt property. However, people run into problems when they use their tax refund to repay friends or family members, prepay future living expenses or catch up on overdue house or car payments. 

Can I keep my house or car in a Chapter 7 bankruptcy if it has a lien? Tricky question.  The technical anwswer is the most concise.  If the equity in the vehicle/house is exempt, you are caught up on the lien/mortgage payments, the lien was properly affixed to the property, and you have the financial means to make future lien/mortgage payments then, yes you may keep it. 
What does it mean to Reaffirm a debt?: The effects of reaffirming a debt are to make the debt nondischargeable.  This sounds contrary to the reason a consumer files bankruptcy in the first place, however by reaffirming a debt the creditor is no longer able to repossess/foreclose on the property securing the debt.  To reaffirm a debt a consumer must sign a reaffirmation agreement after bankruptcy is filed then secure the creditors signature and then file it with the court.  A reaffirmation agreement may be denied if it is not in the consumer's financial best interests.  For example, if the consumer cannot afford the payments or the value of the property is substantially less than the amount due on the loan, reaffirmation would likely be denied.  
What does it mean to Redeem property?  A consumer can strip a lien from property by paying the value of the property or the balance due on the lien, whichever is less.  The problem with redeeming the property is that yoou must have someone willing to give you the money to pay off the loan.  
What does it mean to Surrender Property? If you cannot afford the lien/mortgage payments or just don't want to pay them any more, you can return the property to the lien holder and your obligation on the loan is discharged int he bankruptcy.

Can income tax debt be discharged in Chapter 7 bankruptcy? Income tax debt can be discharged if all the following requirements are met before filing bankruptcy:
• Three (3) years have passed since the tax return was originally due. (This is generally in April of the following year but can be longer if an extension was granted);
• Two (2) years have passes since the tax return was filed with the IRS; and,
• Two hundred forty (240) days have passed since the IRS first assessed the debt.