Chapter 7 Bankruptcy is a process that will eliminate your personal liability for unsecured debts such as credit card debt, medical bills. unsecured lines of credit and debt from foreclosures and auto repossessions.  If certain rules are met, past due federal and state income taxes can be discharged in a Chapter 7 Bankruptcy.  In some limited cases, student loans can be discharged in a Chapter 7 Bankruptcy.  If you own a home, Chapter 7 Bankruptcy will not affect your mortgage loans.  You will be able to keep you home during and after the filing of a Chapter 7 Bankruptcy as long as you are making your monthly mortgage payments.

When you file Chapter 7 Banktuptcy you do not have to lose equity in your home.  Equity in your home can be protected according to Homestead exemption availabile in Bankruptcy per Calfiornia Code of Civil Procedure § 704.730 in the following amounts:

$75,000:  Basic homestead for single person

$100,000:  Head of household

$175,000:  Over 65 or physically disabled (who as a result of that disability is unable to engage in substantial gainful employment) or under 55 with less than $15,000 in annual income ($20,000 if married)

In a Chapter 13 Bankruptcy the same amounts apply and any additional amount of home equity can be protected with the correct formulation of a Chapter 13 Plan.

Chapter 13 Bankruptcy will allow you to repay your past due mortgage payments and save your home from foreclosure.  Chapter 13 Bankruptcy will also allow you to discharge your debts and keep equity in your home or other assets.  In some cases, you may need to file a Chapter 13 Bankruptcy if you make too much money to file a Chapter 7 Bankruptcy case.  You are not automatically obligated to pay 100% of your unsecured debts back in a Chapter 13 Bankruptcy.  Many of our clients pay 0% to 25% to their unsecured creditors in their Chapter 13 Bankruptcy case.  In a Chapter 13 Bankruptcy, you will need to make a monthly payment to the Chapter 13 Trustee.  The amount of the payment depends on several factors that we will calculate for you as part of the Chapter 13 Bankruptcy consultation.

1.  If you are past due on your mortgage or car loans then your monthly payment will need to be an amount at least equal to pay back the past due amounts over 3 or 5 years.

2.  If you have equity in your home or amounts in bank accounts or other assets that exceed the applicable exemption amounts, your Chapter 13 payment will depend on the amount of your unsecured debts.

3.  If are not behind on your mortgage payments and if you do not have any non-exempt assets then your monthly Chapter 13 Trustee payment will depend on how much you can afford to pay based on your monthly budget and the government income and expense guidelines.

Once your bankruptcy case is filed, the Bankruptcy Court will assign a Trustee and set the date for the 341(a) Meeting of Creditors.  At the 341(a) Meeting of Creditors, you will need to bring a government issued picture ID (such as a driver’s license or passport) and your social security card or a W-2 Form or 1099 Form or other document that shows your social security number.  Please note that in most cases your tax return cannot be used as proof of your social security number.  If you have lost your social security card and cannot locate a document with your social security number then you will have to go to the local social security office and request a document that contains and verifies you full social security number prior to the 341a Meeting of Creditors.

Here is a list of questions that the Trustee will most likely ask you at the Meeting of Creditors.  The questions vary slightly depending on the Trustee but are substantially the same.

1.  Please state your name and address.

2.  Did you review your schedules and statement of affairs in your bankruptcy paperwork?

3.  Did you read and sign your bankruptcy paperwork?

4.  When you signed your bankruptcy documents did you do so with the understanding that you were doing so under the penalty of perjury?

5.  Is everything correct in your bankruptcy paperwork?

6.  Have you listed everything you own?

7.  Have you listed all your creditors?

8.  Are there any changes that need to be made to your bankruptcy paperwork?

9.  Have you sold, given away or transferred any real property to anyone within the last 4 years?

10.  Have you sold, given away or transferred any other property to anyone within the last 2 years?

11.  Do you have any domestic support obligations (meaning child support or alimony payments)?  Please Note: If you do have child support obligations then the Trustee will ask you to provide them with the name and address of the person or agency that you are making the payments to.