Debt Relief Through Chapter 7 Bankruptcy
Chapter 7 bankruptcy gives you the opportunity to obtain a discharge of your unsecured debts without having to commit to a lengthy repayment plan. Unsecured debt is any debt that is not backed by collateral, such as credit card debt and medical bills. In a Chapter 7 bankruptcy, your salable assets are sold (“liquidated”) and the money distributed to your creditors to settle your debt.
Having an experienced bankruptcy lawyer on your side can help the process run smoothly and help you avoid any unexpected roadblocks along the way. At the Boulder, Colorado, law firm of St.Clair & Greschler, P.C, we have helped a wide variety of clients obtain the debt relief they need through the Chapter 7 bankruptcy process.
Colorado Bankruptcy Attorneys – Your “Fresh Start” Lawyer
Many people mistakenly believe that they will lose everything when they file for bankruptcy under Chapter 7. But bankruptcy laws allow you to keep certain critical property, including your home, your car, clothing, household items and tools of a trade. In some cases, your bankruptcy trustee may decide that none of your property would be worth selling at auction. This would make your’s a “no asset” case and you would lose nothing.
We understand that going through an unfamiliar legal process can be an intimidating experience. When you hire our firm, we will be there with you from start to finish. From the preparation of the initial petition to the final discharge of your debts, our Colorado bankruptcy attorneys will guide you through the entire process.
FAQs: Chapter 7 Bankruptcy – Colorado Bankruptcy Attorneys
Personal Bankruptcy Options
(Note – this is not legal advice. Please consult with our bankruptcy attorneys to discuss your particular circumstances in relation to filing for bankruptcy. Call us at 303-647-9475.)
Chapter 7 Bankruptcy – Liquidation
In a Chapter 7 Bankruptcy, a debtor’s nonexempt property is sold, and the proceeds are used to pay off creditors. Once the process is completed, most of the debtor’s debt is discharged. Some common questions follow:
How do I qualify?
To qualify, a debtor’s current monthly income must be no more than the state median income. As of November 2011, the median income in Colorado for an individual is $47,361, for a family of two it is $62,,431, for a family of three it is $69,252 and for a family of four it is $79,905. For a household size of more than 4, $7,500 per additional person is added to $79,905 to arrive at the median. Current monthly income is defined as the average monthly income (regardless of whether it is taxable income) over the six months previous to the date of filing, and includes regular contributions to household expenses from non-debtors living in the debtor’s household. Additionally, a debtor must not have had a bankruptcy discharge in the previous seven years.
What if my income is too high to qualify?
A debtor may still qualify for Chapter 7 if they can prove special circumstances, which include the loss of a job, extraordinary expenses from caring for a parent, or the need to continue payment of home or car loans. If the debtor cannot qualify under Chapter 7, they may still qualify for a Chapter 13 bankruptcy. In a Chapter 13 bankruptcy, the debtor proposes a payment plan for five years, under which the debtor must make sum certain payments to the bankruptcy trustee that are then paid over to creditors.
What is the process?
The process may vary to some extent depending on the facts and circumstances of each debtor. Every debtor must fill out paperwork listing all assets and liabilities, which is then filed with the bankruptcy court. Creditors have an opportunity to object to the discharge of debts owed. If there are assets in a Chapter 7 case, creditors are afforded 90 days to make claims, after which the trustee will then sell any of the debtor’s nonexempt assets and then pay off creditors, after which the debtor will be discharged from most debts.
In a “no asset” Chapter 7 bankruptcy, where the debtor has no non-exempt property, the creditors have no reason to make claims, and the debtor will be discharged from most debts. Creditors may still be allowed to take back secured property, such as an automobile that is used to secure an auto loan, unless the loan is reaffirmed or redeemed.
How much will it cost?
There is a filing fee of $306 plus attorney costs, which vary depending on the attorney and the complexity.
How can I get my creditors to stop bothering me?
As soon as a bankruptcy petition is filed, there is an automatic stay on most collection efforts, including lawsuits, garnishments, and telephone calls. We can help you! Call us at 303-647-9475 to learn how.
How long does the process usually take?
A meeting of creditors will occur approximately 30 days after filing. During this meeting, both the trustee and creditors may ask questions of the debtor. A discharge of debts occurs 90 days after the meeting in a typical case where there are no objections or issues.
Do both my spouse and I have to file together?
No, but a spouse’s contribution to household expenses will be considered as part of the debtors monthly income.
What do I need to do to prepare to file?
A bankruptcy filer must complete a credit counseling course during the six months prior to filing for bankruptcy. Before consulting with an attorney, it is helpful to collect information regarding debts, including credit card debts, mortgage expenses, car payments, etc. You should determine the previous six months income and expenditures and be prepared to speak to the approximate value of any assets.
What is involved with the credit counseling?
The counselors address opportunities for available credit counseling and assist the debtor in performing a budget analysis. Some of these courses can be done entirely online. The courses can most likely be completed in an evening, with a brief follow up phone call.
Will I lose my home or my car?
Certain property is considered an exempt asset, subject to certain dollar limits, under the bankruptcy code. A home is such an exempt asset (up to $50,000 in Colorado as of the day of writing), along with things such as an automobile (up to $5,000 Colorado as of the day of writing), household goods, and tools used in a business.
What if I want to keep a non-exempt asset?
This is at the discretion of the creditor, but a debtor can reaffirm a debt by signing a separate agreement not to discharge the debt secured by the asset.
What about my business?
A business interest is considered an asset under the bankruptcy code, and an attorney should be consulted to address a debtor’s specific situation.
What debts can be discharged?
All unsecured debts can generally be discharged. Credit card debts, auto loans, and personal loans are examples of dischargeable debts.
What debts cannot be discharged?
Tax liabilities and student loans are examples of debts that cannot be discharged. There are other circumstances where certain debts cannot be discharged, such as where a debtor has misrepresented their financial condition in order to obtain a loan or made a preferential payment to a creditor within a certain time period.
How badly will it affect my credit?
A bankruptcy may be very detrimental to one’s credit, however, failing to make payments on time and defaulting on loans can have an ongoing negative effect.
What is a preferential transfer?
A preferential transfer occurs when the debtor makes a payment to a non-insider debtor within three months of the bankruptcy filing, or to an insider (partner or family member, for example) within one year of the bankruptcy filing. These payments can be recovered by the bankruptcy trustee.
What if my home is already in foreclosure?
The bankruptcy process and the foreclosure process operate independently. However, the filing of a Chapter 7 bankruptcy petition temporarily halts the foreclosure process until the discharge is entered or the bankruptcy stay is lifted. Depending on when the bankruptcy petition is filed, a debtor may be able to postpone the foreclosure for up to six months.
Will I still be able to get a mortgage modification if I file a Chapter 7?
Yes, assuming you can qualify under your bank’s guidelines after filing Chapter 7. However, the bank will not do the modification until after the discharge enters. The debtor can at least begin the process before the discharge enters by filling out the appropriate bank paperwork. The debtor also needs to stay current on monthly payments.
Let us Help! Schedule Your FREE Consultation with St.Clair & Greschler, P.C., Today
Contact a Boulder, Colorado, lawyer today to schedule your free, no-commitment consultation with one of our experienced attorneys. We are available during regular business hours and by appointment evenings and weekends. Reach us online or by phone at 303-647-9475.