Chapter 7 bankruptcy lawyersChapter 7 bankruptcy lawyers

Chapter 7 Bankruptcy

Chapter 7 Bankruptcy Lawyers Serving Kansas City, Missouri

Chapter 7 bankruptcy discharges unsecured, non-priority debts like credit cards, medical bills, payday loans, etc. Chapter 7 does not discharge priority debt such as taxes or domestic support obligations like child support or alimony. 

Bankruptcy will also discharge secured debt like a mortgage or car loan, and you can still keep the property if you redeem the property or reaffirm the loan and continue to make the payments. You can, however, discharge your obligation on a mortgage or car loan if you also surrender the property.

At Jeppson Law Office, our competent Chapter 7 bankruptcy lawyers are here to help. When your debt is getting out of control and you have no other way to stop it, bankruptcy might be your best option.

If your debt is accumulating, you’re facing a pile of bills, debt collectors are calling you incessantly, and the danger of losing your house is becoming more than a mere concern, bankruptcy may be the answer.

Why Do You Need Chapter 7 Bankruptcy Lawyers in Missouri?

Sadly, financial difficulties are a part of life. For others, these issues are minimal and may be dealt with quickly. For others, the difficulties are far more severe.

When you have severe financial problems, bankruptcy may be your only alternative. But before you do so, you should seek the counsel of our professional Chapter 7 bankruptcy lawyers.

Complicated Paperwork

Filing bankruptcy requires documentation. The bankruptcy may be refused or delayed if anything is not correctly filled out. Our professional Chapter 7 bankruptcy lawyers are familiar with this documentation, assuring you will do it accurately the first time.

Negotiate With Creditors

If a creditor contests the amount of a discharged obligation, our adept Chapter 7 bankruptcy lawyers can assist you. We are skilled with negotiation strategies, allowing us to help our clients get the best possible solution.

Before filing for bankruptcy, you should consult with one of our knowledgeable Chapter 7 bankruptcy lawyers. Don’t hesitate to contact Jeppson Law Office!

What is Chapter 7 Bankruptcy?

Most of your unsecured debt is discharged under Chapter 7, often known as liquidation bankruptcy. Unsecured debts include credit card debts, personal loans, and medical costs.

Chapter 7 bankruptcy is an option if you face financial difficulties that make it difficult to pay your bills and other monthly costs. 

What Are the Eligibility Requirements for Chapter 7 Bankruptcy?

Chapter 7 bankruptcy lawyersAlmost any person can file for Chapter 7 bankruptcy in the United States. Before becoming eligible for a discharge — the ruling that eliminates eligible debt — you must fulfill numerous requirements.

For example, suppose you are an individual filing for consumer bankruptcy. In that case, your income must satisfy the “means test” unless you are a qualifying disabled veteran or your obligations stem substantially from company operations.

In addition, the court will dismiss your case if you have filed for bankruptcy within a particular time frame or if it suspects you are defrauding your creditors. Also, an incorporated entity is not eligible for a Chapter 7 debt discharge.

You Have Enough Income to Repay Your Debts

In bankruptcy, clear standards determine who is eligible for a Chapter 7 discharge or a Chapter 13 repayment plan. Here are the prerequisites you must fulfill.

How High is Your Income?

The first step in determining whether you are eligible to apply for Chapter 7 bankruptcy is to compare your “current monthly income” to the state median income for families of your size. Your “current monthly income” is the average of your income over the previous six months.

The law presumes that you are qualified for Chapter 7 bankruptcy if your income is less than or equal to the median. To apply for Chapter 7 bankruptcy, you must pass “the means test” if your income exceeds the median.

Do You Have Enough Disposable Income to Repay Some Debts?

The means test analyzes whether you have sufficient disposable income to repay at least a portion of your unsecured loans over five years.

Some examples of unsecured debts are credit card balances, personal loans, and medical expenditures not backed by collateral.

Do You Have Money Left Over Each Month?

The trustee will not rely solely on the means test to assess whether you can repay creditors. 

The trustee will review Schedules I (Your Income) and J (Your Expenses). If the monthly net amount indicates that you have sufficient funds to make substantial monthly payments to creditors, the trustee will suggest that your case be converted to Chapter 13.

You Previously Received a Bankruptcy Discharge

If you received a discharge of your debts in a Chapter 7 bankruptcy case during the last eight years or a Chapter 13 case within the last six years, you are not eligible for another Chapter 7 bankruptcy discharge.

The Court Dismissed Your Bankruptcy Within the Previous 180 Days

You are ineligible to file for Chapter 7 bankruptcy if a previous Chapter 7 or Chapter 13 case was dismissed within the preceding 180 days for one of the following reasons:

  • you violated a court order
  • the court ruled that your filing was fraudulent or constituted an abuse of the bankruptcy system,
  • you requested the dismissal after a creditor asked for relief from the automatic stay

You Defrauded Your Creditors

A bankruptcy court may dismiss your case if it believes you attempted to defraud your creditors or hid assets to keep them for yourself rather than sell them to pay off your debt.

Certain behaviors raise red flags for the court and trustee. The court might dismiss your bankruptcy case if you engaged in any of these activities last year. Here are some activities that the trustee is likely to analyze closely:

  • selling assets to your friends or relatives for less than the fair market value
  • running up debts for luxury items when you didn’t have a way to pay them off
  • concealing property or money from a business partner
  • lying about your income or debts on a credit application

In addition, you must sign your bankruptcy documents under “penalty of perjury” and affirm that the contents are accurate. Suppose you intentionally fail to disclose property, omit material information about your financial affairs, or use a false Social Security number, and the court discovers your actions. In that case, the court may dismiss your case and refer the matter for fraud prosecution.

The Filer is a Corporation or LLC

A business can declare bankruptcy, and there are situations when it makes sense. However, Chapter 7 bankruptcy will not eliminate the debt of a corporation or LLC. The trustee will instead liquidate the company’s assets and distribute the proceeds to creditors.

What Are the Basic Steps in Filing a Chapter 7 Bankruptcy?

Analyze Your Debt

Not all debts are eliminated in Chapter 7 bankruptcy. In Chapter 7 bankruptcy, you will be able to “discharge” or eliminate the following debts:

  • credit card balances
  • medical bills
  • electric, gas, cable, and phone bills
  • personal and payday loans
  • apartment and car leases
  • gym memberships and other dues

The following are examples of “nondischargeable” debts that persist after declaring Chapter 7 bankruptcy:

  • child and spousal support obligations
  • most student loan balances
  • recently incurred tax debt

Additionally, it is usual to pledge a home or vehicle as collateral when obtaining a mortgage or auto loan, creating a “secured debt.” You should be aware that you will lose the property if you are delinquent on the loan when you file for Chapter 7 bankruptcy and if you continue to be delinquent after your case has concluded.

Determine Your Exemptions

Exemption laws specify what assets can be protected in Chapter 7 bankruptcy. Most individuals can uphold the following:

  • household furniture and appliances
  • bedding and kitchenware
  • clothing and prescribed medical devices
  • some tools needed for your business
  • ERISA-qualified retirement accounts
  • some equity in a car and home

Make Sure You’re Eligible

Unless the majority of your debt is from a business enterprise or you qualify as an armed forces member, you must take and pass the Chapter 7 means test. This is what you will do:

  • calculate your gross income during the six months before filing
  • double it
  • compare it to the average gross income in your state for your family size; you’ll find the figures on the U.S. Trustee Program website

You qualify if your gross income equals or less than that amount. If you fail, you will have a second opportunity to deduct eligible costs from your income. If sufficient funds remain to repay significant amounts to creditors, you are still ineligible and must seek debt relief under Chapter 13. If you have nothing left for creditors, you qualify for Chapter 7 bankruptcy.

There are further qualifying requirements. For instance, you may be required to postpone your bankruptcy filing to comply with the multiple bankruptcy filing waiting time restrictions.

Take a Credit Counseling Course

Individuals filing for Chapter 7 bankruptcy must finish a course before filing. You can take the course online or over the phone up to 180 days before filing for bankruptcy.

Fill Out and File the Chapter 7 Bankruptcy Forms

On Chapter 7 bankruptcy paperwork, you will provide the court with information on your property, debts, income, and expenses, among other things. You must give your entire present and prior financial condition, including whether you intend to keep your vehicle, house, and other secured property or return them to the lender. It would be best if you also revealed property transactions during the preceding ten years.

Your case begins upon completing the necessary bankruptcy paperwork (the “petition”). Due to the length of a bankruptcy file, which may be up to sixty pages, you can use the emergency filing method if you’re pressed for time; it takes fewer papers. The bankruptcy court will dismiss your case if the remaining forms are not filed within fourteen days.

There is also a filing cost. If you cannot pay, you may petition the court to divide the fine into four installments or waive it entirely. Your family income must be at or below 150 percent of the federal poverty limits, and you cannot be able to pay in installments.

Submit Documents to the Chapter 7 Bankruptcy Trustee

You will demonstrate the integrity of your bankruptcy petition by submitting financial documentation to the Chapter 7 trustee assigned to your case.

Meet With the Chapter 7 Bankruptcy Trustee

At the 341 meeting of creditors in Chapter 7 bankruptcy, the trustee will verify your identity and inquire about your financial circumstances. Our Chapter 7 bankruptcy lawyers may perform this function if the meeting is virtual. Creditors can attend the meeting, although they do so infrequently.

File Needed Objections and Motions

If you contest a creditor’s claim against your case or wish to erase liens in Chapter 7 bankruptcy, you will address these issues before closing your case. In most circumstances, motions are unnecessary, and if you forget to handle a lien, the court will likely allow you to reopen your bankruptcy case.

Complete a Debtor Education Course

Before getting your debt-discharge order, you must complete the second “debtor education” course. The court will dismiss your case without providing a discharge if your certificate is not submitted by the deadline.

Fixing this issue might be costly since you may need to file a motion and pay another bankruptcy filing fee.

What is a Chapter 7 Bankruptcy Discharge?

A bankruptcy discharge is an order by the bankruptcy court that terminates the debtor’s contract with creditors. Without the contract, the filer is not compelled by law to repay the discharged obligation, and the creditor cannot pursue collection efforts.

However, the debt will not vanish totally. On the bankruptcy petitioner’s credit report, the debt will be listed as “discharged in bankruptcy” for up to ten years. However, the impact on the debtor’s credit score will diminish with time.

Most Chapter 7 petitioners get a discharge order around four months after filing.

Which Debts Can You Discharge in Chapter 7 Bankruptcy?

Chapter 7 bankruptcy “discharges” credit card balances, medical debts, past-due rent payments, payday loans, delinquent telephone and utility bills, vehicle loan amounts, and even mortgages in as short as four months.

Which Debts Can’t You Discharge in Chapter 7 Bankruptcy?

The discharge order will not identify the debts you eliminated in Chapter 7 bankruptcy. Instead, it will detail the obligations for which the law holds all bankruptcy filers liable. You are responsible for the following:

Secured Debts (Mortgages and Car Loans) If You Keep the Property

Chapter 7 bankruptcy, mortgages, car loans, and other secured debts are discharged. However, if you fail to continue making payments as planned, the lender will use its lien rights to reclaim the home, vehicle, or other collateralized property.

You must also complete additional standards to prevent losing property in Chapter 7 bankruptcy; thus, you should learn about maintaining your house and vehicle.

Priority Debts (Recent Income Taxes and Support Obligations)

Even if you declare bankruptcy, you must repay critical priority debts.

Debts Incurred by Fraud or Criminal Acts

A court can declare an obligation nondischargeable if a debtor committed fraud against a creditor or committed another unlawful conduct, such as harming or killing someone while driving drunk. The creditor must initiate a bankruptcy case or “adversary proceeding” and present evidence that the debtor committed fraud or qualifying wrongdoing.

Student Loans

The bankruptcy court does not automatically dismiss student loans. You will continue to be liable for paying a student loan after filing for Chapter 7 bankruptcy unless you file an adversary process and demonstrate that repaying the debt would cause undue hardship or if your bankruptcy court imposes a comparable burden.

Why Does Your Filing Date Affect the Debts Chapter 7 Bankruptcy Covers?

Chapter 7 bankruptcy will erase debts accrued before filing, but not those accrued after filing. 

Pre-Filing Debt

The bankruptcy court will discharge all “pre-petition” debts that qualify. You accrue pre-petition debts before your bankruptcy filing.

Post-Filing Debt

The debts incurred after filing for Chapter 7 are referred to as “post-petition” debts. You will remain accountable for the post-petition debt, including those accrued during your bankruptcy proceeding.

The court dismisses debts that existed before the Chapter 7 filing date. You must pay for all purchases made on credit after submitting your petition, even those made before securing a discharge.

How Many Times Can You File for Bankruptcy?

You are permitted to file for bankruptcy as often as you choose. 

However, there’s a catch. If you file too soon after wiping out debt in your old case, you won’t be eligible for another “debt discharge” in your new case. The waiting time must finish before you qualify for additional debt forgiveness.

When Are Multiple Bankruptcy Filings Abusive?

The term “abusive bankruptcy filing” can apply to a Chapter 7 petition that fails the means test. However, it may also refer to a case filed by a person who improperly utilizes the bankruptcy procedure to, for example, escape creditors or buy time in foreclosure or litigation.

Repeat filers suffer repercussions for these strategies, such as losing the mentioned automatic stay or dismissal.

Our Chapter 7 Bankruptcy Lawyers Are Always Here To Help

Our Chapter 7 bankruptcy lawyers at The Jeppson Law Office have the experience and knowledge to guide you through your bankruptcy and put you on the road to recovery.

We can assist you in evaluating your financial condition and devising a plan to get you back on track through bankruptcy.

We will make every effort to help you back on your feet!