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Please find located below questions to the most common questions related to bankruptcy law and filing a Chapter 7 or Chapter 13 case in the Central District of California.
What is "Chapter 7" and who should file and maintain a Chapter 7 Case?
What is "Chapter 13" and who should file under this chapter?
Who should not file a Chapter 7 case?
What is an automatic stay and will creditors keep calling if I file a Chapter 7 case?
Does a person lose any legal or civil rights by filing a Chapter 7 case?
Do I have go to court and talk to a judge?
Will a person lose all of his/her property if he/she files a Chapter 7 case?
What is a discharge? Will I get a discharge?
Credit Counseling
Filing Fees.
Who is permitted to file a Chapter 7 case?
Any person who resides in, or has property in the United States is permitted to file a Chapter 7 bankruptcy case, except a person who has intentionally dismissed a prior bankruptcy case within the past 180 days. One must also qualify for a Chapter 7 under a process called "means testing".
Who should not file a Chapter 7 case?
A person who has substantial debts that are not dischargeable through a Chapter 7 should not file a Chapter 7 case. Also, filing a Chapter 7 case is not usually advisable for a person with disposable income sufficient to make minimum payments of anything more than $100 of current monthly disposable income to unsecured creditors - a presumption of abuse may arise and the case will likely be dismissed or will need to be converted to a Chapter 13.
What is an automatic stay and will creditors keep calling if I file a
Chapter 7 case?
No. The filing of a Chapter 7 case by a person automatically suspends virtually all collection and other legal proceedings pending against that person. This court-ordered suspension of creditor activity against the person filing is known as the automatic stay. A few days after a Chapter 7 case is filed, the court will mail a notice to all creditors ordering them to refrain from any further action against that person.
Does a person lose any legal or civil rights by filing a Chapter 7
case?
No. Filing a Chapter 7 case is not a criminal proceeding, and a person does not lose any civil or constitutional rights by filing.
Do I have go to court and talk to a judge?
No. Mandatory attendance is required at the “meeting of creditors” (or 341(a) meeting, as it is commonly referred to by legal code section designation) will be held about one month after a Chapter 7 case is filed. The person filing the case must bring along photo identification and proof of social security number. At this hearing the person is put under oath and questioned about his/her debts, assets, income, and expenses by the hearing officer or trustee. In most instances, no creditors appear at the hearing; but any creditor that does appear is also permitted to question the person who filed the case. For most, this will be the only court appearance they will be required to attend, but if the bankruptcy court decides to not grant the person the discharge or if the person decides to reaffirm a debt there may be another hearing about three months later which the person will have to attend.
Will a person lose all of his/her property if he/she files a Chapter 7
case?
Usually not. Certain property is exempt and may not be taken by creditors unless it is encumbered by a valid mortgage or lien. A person is usually allowed to retain his/her unencumbered property in a Chapter 7 case. A person may also be allowed to retain certain encumbered exempt property. Encumbered property is property against which a creditor has a valid lien, mortgage or other security interest.
What is a discharge?
A discharge is a court order releasing a debtor from all of his/her dischargeable debts and ordering the creditors to not attempt to collect them from the debtor. A debt that is discharged is a debt that the debtor is released from and does not have to pay.
Will I get a discharge?
Any person who is qualified to file and maintain a Chapter 7 case is eligible for a Chapter 7 discharge except for the following:
· A person who has been granted a discharge in a Chapter 7 case within the last 8 years.
· A person who has been granted a discharge in a Chapter 13 case within the last 6 years, unless 70 percent or more of the unsecured claims were paid.
· A person who files and obtains court approval of a written waiver of discharge in a Chapter 7 case.
· A person who conceals, transfers or destroys his/her property with the intent to defraud his/her creditors or the trustee in a Chapter 7 case.
· A person who conceals, destroys or falsifies records of his/her financial condition or business transactions.
· A person who makes false statements or claims in a Chapter 7 case, or who withholds recorded information from the trustee.
· A person who fails to satisfactorily explain any loss or deficiency of his/her assets.
· A person who refuses to answer questions or obey orders of the bankruptcy court, either in his/her bankruptcy case or in the bankruptcy case of a relative, business associate, or corporation with which he/she is associated.
· A person who, after filing a Chapter 7 case, fails to complete an instructional course on personal financial management.
· A person who has been convicted of bankruptcy fraud or who owes a debt arising from a securities law violation.
Pre-Filing Credit Counseling and Post-Filing Debtor Education
A person is not permitted to file a Chapter 7 case unless he or she has, during the180-day period prior to filing, received from an approved nonprofit budget and credit counseling agency an individual briefing that outlined the opportunities for available credit counseling and assisted the person in performing a budget analysis. The pre-filing, bankruptcy specific Credit Counseling is usually 60-75 mintues long, and it is a painless and fairly easy to complete process - depending on the provider, credit counseling sessions may be conducted by telephone or on the internet, if desired. When the Chapter 7 case is filed, a certificate from the agency describing the services provided to the person must be filed with the court. After a Chapter 7 case is filed and before a discharge is granted, a second consumer counseling session or “Debtor Eduction” course must be completed. Again, this counseling and eduction session is often available by telephone or online, and it is to be completed after the meeting of creditors, and before a person may receive a discharge.
Filing Fees.
The filing fee is $299.00 for either a single or joint Chapter 7 case. The filing fee is payable when the case is filed. However, if the person filing can show that his or her income is less than 150 percent of the official poverty line and that he or she is unable to pay the filing fee, the court can waive payment of the filing fee. Unless payment is waived by the court, the entire filing fee must ultimately be paid or the case will be dismissed and no debts will be discharged.