Chapter 7 Bankruptcy

Chapter 7 bankruptcy is sometimes called a “fresh start bankruptcy” because it cancels most types of debt.  The types of debt which qualify to be cancelled under Chapter 7 Bankruptcy include:

  • Personal loans
  • Credit card debt
  • Medical bills
  • Tax debt if all IRS conditions have been met
  • Judgments for debts owed
  • Mortgage debt if you do not wish to keep your house

The whole Chapter 7 bankruptcy process takes about four months, costs $306 filing fees, and usually requires only one brief meeting, out of court, with the bankruptcy judge to process your bankruptcy. 

Eligibility for Chapter 7

  • You must be eligible to file for bankruptcy, and thus the rules vary depending on the type of case you want to file.  
  • There is a means test for individuals to qualify for Chapter 7 bankruptcy. Your income and expenses are examined to see how they compare to the standard for your state. 
  • Stated simply, you calculate your medium income by adding together your gross income for the six months prior to the current month and divided by six. If your average monthly income using this formula is below the average monthly income for a similarly sized family, you pass the medium income test and you proceed to file Chapter 7. 

Filing a Chapter Case

To begin a Chapter 7 bankruptcy case, you must complete a packet of forms and file them with the bankruptcy court in your area. You must provide:

  • A full list of creditors, along with their claim types and amount
  • A list of all you property
  • The source, amount and frequency of your income
  • A detailed list of monthly living expenses

The Automatic Stay

Often, people filing for bankruptcy have faced weeks, months, or even years of harassment by creditor demanding payment and threating lawsuits and collection actions. Once a debtor files for bankruptcy, the debtor’s estate is protected by the “automatic stay”, which bars creditors from trying to collect debts without the permission of the bankruptcy court. Filing your bankruptcy petition instantly creates a federal court order that requires your creditors to stop all collection efforts.  

After Bankruptcy

Once you receive your bankruptcy discharge, you are free to resume your economic life without reporting your activities to the bankruptcy court unless you receive an inherence, insurance proceeds, or proceeds from a divorce settlement within 180 days after your filing date. 

Legal Help With A Chapter 7

If you have any questions about how we may assist you, please contact Managing Partner Dae Hyun Michael Chung at mchung@chungassoicate.com

 

Chapter 13 Bankruptcy

For those who do not qualify for eliminating their debts under Chapter 7 bankruptcy, Chapter 13 bankruptcy can be a good solution. By filing Chapter 13 bankruptcy, you get to keep all of your property, regardless of its value. However, you agree to a portion of your debt over a three-year or five-year period, typically at a reduced interest rate, free from additional penalties and fees. 

Chapter 13 repayment Plan

Chapter 13 bankruptcy is a debt repayment plan for individuals, but the repayment can be anywhere from 0% to 100% of your unsecured debt. The debt repayment plan you submit with your order bankruptcy papers shows the judge how – and to what extent – you will pay off your debts. Even a 100% repayment plan is a Chapter 13 case can often be a much better deal than trying to repay your creditor outside of bankruptcy, because you pay zero percent (0%) interest in a Chapter 13 case.  

Which Debts Are Discharged in Chapter 13 Bankruptcy

As a general rule, whatever you still owe on most credit card debts, medical bills, and lawyer bills is discharged, as are most court judgments and loans.

Debts That Are Not Discharged

The types of debt which qualify to be cancelled under Chapter 7 Bankruptcy include:

  • Debts that you don’t list in your bankruptcy forms
  • Court-imposed fines and restitution
  • Bank child support and alimony
  • Student loans
  • Recent back taxes
  • Debts you owe because of a civil judgment arising out of your willful or malicious acts, or for personal injuries or death caused by your drunk driving.

The Automatic Stay

When a debtor files for Chapter 13 bankruptcy, the debtor’s estate is protected by the “automatic stay”, which bars creditors from trying to collect debts without the permission of the bankruptcy court. Filing your bankruptcy petition instantly creates a federal court order that requires your creditors to stop all collection efforts.  

Reason to Choose Chapter 13

Chapter 13 bankruptcy might make sense if you will have adequate, steady income to fund your plan for the appropriate period of time. Chapter 13 bankruptcy may be a better option for you if a significant portion of your debt would not be covered by a Chapter 7 bankruptcy, and/or if you are behind with your car or mortgage payment and wish to avoid repossession or foreclosure.  

Legal Help With A Chapter 13

If you have any questions about how we may assist you and your family, please contact Managing Partner Dae Hyun Michael Chung at mchung@chungassoicate.com