Chapter 7 Bankruptcy
Chapter 7 is the chapter of the Bankruptcy Code that involves liquidation and is sometimes called “straight” bankruptcy. For the average person, a Chapter 7 bankruptcy is a fairly simple and quick proceeding. In most cases, it takes less than five months after filing for an individual to receive a discharge of debts. Some people believe the court will take everything they own when they file bankruptcy. This is not true.
The State of Ohio and the federal government provide generous exemptions that cover the majority of assets an average person owns (e.g., house, car, household goods, retirement accounts). If there is a chance you have an asset that may not be exempt, you may still have the option to file a Chapter 13 bankruptcy and retain your assets. The Jones Law Firm will thoroughly review your options with you before you file. Contact us today to schedule a free consultation.
Eligibility for Chapter 7 BankruptcyAn individual is not eligible to receive a Chapter 7 discharge if that individual filed another Chapter 7 case within eight years prior to filing. If you have filed a Chapter 7 within the last eight years, you cannot file another Chapter 7 case. Some people choose to wait until the eight-year period is over to begin considering bankruptcy again. However, if you are not eligible because of a prior Chapter 7 filing, it is important to remember that you may still qualify to file a Chapter 13 bankruptcy, and there are several bankruptcy alternatives that can also provide relief. In addition, to qualify for a Chapter 7 bankruptcy, you must meet certain income requirements. This is called the “means test.” Put simply, your income must be below the median income in the State of Ohio to qualify for Chapter 7. During your initial consultation, we will analyze your income and determine whether you qualify for Chapter 7. Don’t worry — if you do not qualify for Chapter 7 because you fail the “means test,” you may still qualify to file Chapter 13.
Advantages to Filing Chapter 7 BankruptcyThere are two major advantages that filing Chapter 7 bankruptcy can provide you: (1) the automatic stay, and (2) the discharge.
1. The Automatic Stay Stops Creditor Collections ImmediatelyAs soon as you file your Chapter 7 bankruptcy petition, an automatic stay goes into effect. This immediately prevents creditors from starting or continuing any collection activity. This includes wage garnishment, home foreclosure, vehicle repossession, lawsuits, and creditor harassment (e.g., phone calls, letters, etc.). Once you file your case, you are well on your way to a financial fresh start.
2. Discharge of Most Forms of Debt ForeverAt the end of your Chapter 7 bankruptcy case (usually between three and six months), you will receive a discharge. This is the main goal of every individual Chapter 7 case. Chapter 7 discharges most forms of debt. After you receive your discharge, creditors are legally prohibited from ever collecting on the discharged debt again. When you meet with The Jones Law Firm, we will make sure you know if you have any debt that may not be included in the discharge.
Credit CounselingYou must complete a credit counseling class prior to filing bankruptcy. During your initial consultation, we will provide you information about this course. The course usually takes less than an hour and can be completed online or over the phone. After completing credit counseling, you will receive a certificate of credit counseling that is valid for six months. Please contact us immediately after completing your course so we can schedule your appointment to sign your bankruptcy petition.
Filing Your CaseWhen you are ready to file your Chapter 7 case, we will schedule an appointment for you to sign your petition. We will provide you with a list of all documents and information you will need to provide our office before you file, as well as the information you will need to bring to your petition signing appointment. Some items that may be required include the following:
- Six months of paystubs
- Car title
- Proof of insurance (vehicle and homeowner’s)
- Deed and mortgage documents
- Bank statements
- Retirement account statements
- List of all your debts (**we can help you get your credit report)
- List of all your assets