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A Chapter 7 bankruptcy (also
known as a “straight
bankruptcy”) filing will
generally result in the
discharge of most types of debts
including credit card balances,
mortgage and automobile
deficiencies, personal loans,
most civil judgments, collection
accounts, and medical
bills. There are, however,
certain debts that will not be
discharged which include student
loans, domestic support
obligations, fines/penalties
arising from a crime or
malicious conduct, and debt
procured by fraud. Furthermore,
a person filing bankruptcy
("debtor") may not receive a
Chapter 7 discharge if he or she
has received a previous
discharge under Chapter 7 in the
previous eight years.Both small
businesses and debtors may file
Chapter 7 bankruptcy. A debtor
with primarily consumer debts is
eligible to receive a Chapter 7
discharge if he or she passes
the Means Test. To pass the
Means Test, and debtor’s average
monthly income for the past six
months must be less than the
California Median or if his or
her income is above the
California Median and his or her
qualified deductions place his
or her income beneath the
disposable income threshold. In
addition, even when a debtor
does not pass the Means Test,
there may be special
circumstances that may be taken
into consideration to qualify
for a Chapter 7 bankruptcy.
When the debt incurred is
primarily business debt, a
Chapter 7 business bankruptcy
filing may be the best
option. If the debt is over 50%
business debt, then the Means
Test will not apply.
Meeting of Creditors
After approximately 4-5 weeks
after the petition is filed, a
341 (a) Meeting of Creditors
will be held. At the meeting,
the trustee will ask the debtor
questions about the debtor’s
financial affairs and accuracy
of the petition. Creditors have
the right to be present and ask
questions regarding assets and
liabilities, however, it is rare
when creditors do appear at the
meetings. Once the meeting
begins, the meeting usually
lasts no more than five minutes.
Once the meeting is concluded,
if there are no objections, the
debtor will receive his or her
discharge approximately 60 days
after the 341(a) meeting.
Cost
The court filing fee for a
Chapter 7 case is $299, which
must be paid by the debtor when
the case is filed. The
attorney’s fees we will charge
for a Chapter 7 petition varies
on a case-by-case basis. Our
fees, however, are
reasonable. Additionally, we
offer payment plans.
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