You must have a place of residence, a place of business, or property in the U.S.in order to file. You can file a Chapter 7 bankruptcy petition whether or not you are employed.
In addition, you must not have:
What is the difference between Chapter 7 and Chapter 13?
In Chapter 7, you are subjecting your non-exempt assets to court liquidation and attempting to discharge those debts that Chapter 7 will eliminate. In Chapter 13, you are reorganizing your debts and paying a portion. The choice depends on the kinds of debts you owe, your income, and the value of your assets.
Chapter 7 is known as "liquidation bankruptcy." In a Chapter 7 case, you file several forms with the bankruptcy court listing income and expenses, assets, debts, and property transactions for the past year. A court-appointed individual, the bankruptcy trustee, is assigned to oversee your case.
About a month after filing, you must attend a First Meeting of Creditors where the trustee reviews your forms and asks questions. Despite the name, creditors rarely attend. If you have any non-exempt property, the trustee will ask that you turn it over to him or her. The meeting normally lasts only a few minutes.
If there are no challenges from creditors, approximately two months later, you receive a discharge order, which is a notice from the court that "all debts that qualified for discharge were discharged." Then, your case is over.
Chapter 13 is also called "reorganization bankruptcy." You file most of the same forms as you file in Chapter 7, plus a proposed repayment plan, in which you describe how you intend to repay your debts over the next three to five years.
Some debts must be repaid in full; others, you pay only a percentage while others aren't paid at all. Some debts you have to pay with interest, some are paid at the beginning of your plan, and some at the end. A bankruptcy trustee is assigned to oversee the case and handle your payments.
You will attend the First Meeting of Creditors about six to seven weeks after you file. If the trustee is satisfied with your payment plan, he or she will recommend its approval by the judge. A few weeks after the First Meeting of Creditors, the judge normally confirms (approves) your plan if no creditor opposes it and the trustee has recommended it.
When a creditor or the trustee objects to a plan, the judge usually holds a hearing within a few months to determine whether your plan should be approved over the objection. It is also possible for you to resolve the objection before the judge's hearing by amending the plan to satisfy the objection.
If your plan is confirmed, and you make all the payments called for under your plan, you will receive a discharge of any balance owed on all dischargeable debts at the end of your case.
You should consult with an attorney to decide which type of bankruptcy makes sense for you.
What happens if I file a Chapter 7 bankruptcy?
You begin a Chapter 7 bankruptcy by filing a petition with the bankruptcy court. In this petition, you are required to disclose to the court all your property, debts, income, and expenses.
You must also turn over all non-exempt property to the bankruptcy trustee, who then converts it to cash for distribution to the creditors. The debtor then receives a discharge of all dischargeable debts. You should work with an attorney to find out which assets you can keep and what debts can be discharged.
When is the best time to file a chapter 7 bankruptcy?
The answer depends on the status of your dischargeable debts, the nature and status of your non-exempt assets, and the actions taken or threatened to be taken by your creditors.
Here are some chapter 7 dos and don'ts:
What are reasons to file Chapter 7 bankruptcy?
You are not required to state a reason for filing bankruptcy, but the most common reasons for consumer bankruptcy are often beyond the control of the individual debtor.
They include unemployment, large medical expenses, marital problems, family crisis, overextended credit, failure of a business due to economic conditions, and unexpected expenses.
Are there debts that are not dischargeable in Chapter 7?
Yes. The following categories of debt are generally not dischargeable:
Can a Chapter 7 case be converted to Chapter 13?
A pending Chapter 7 case may be converted to Chapter 13 at any time prior to discharge if the court approves a motion to convert.
Can I keep my home if I have a mortgage?
One of the biggest concerns you may have in considering bankruptcy is the possibility of losing your home.
If you are behind on your mortgage payments, you will almost certainly lose your house if you file a Chapter 7 bankruptcy. Your mortgage lender will ask the bankruptcy court to lift the automatic stay to begin or resume foreclosure proceedings.
In a Chapter 13 bankruptcy, you will not lose your house if you immediately resume making the regular payments called for under your mortgage contract agreement and you repay your missed mortgage payments through your Chapter 13 plan.
If you are current on your mortgage payments, you will not lose your house if you file for Chapter 13 bankruptcy, as long as you continue to make your mortgage payments. In Chapter 7 bankruptcy, whether or not you will lose your house depends on the amount of equity you have in the property. This is known as the "homestead exemption."
In California, the homestead exemption on real or personal property you occupy, including a mobile home, boat, stock cooperative, community apartment, planned development, or condo, is as follows:
If your home equity is too large for you to keep your home in a Chapter 7 case, you may want to consider Chapter 13 instead so that you can develop a plan for repayment without selling the home.
Can I keep my home if I rent?
If you are current on your rent payments and file for bankruptcy, your landlord will not be notified. If you are behind on your rent when you file and your landlord has begun eviction proceedings, your landlord can come to the court to have your automatic stay lifted and complete the eviction.
Will I lose my car if I file for bankruptcy?
In Chapter 7, you can keep your vehicle if the equity in it fits within your bankruptcy exemptions. If the equity is greater than your exemptions, the Chapter 7 trustee can sell the vehicle to pay creditors. If there is a loan on the vehicle, you must maintain your contract payments to the lender or they may request court permission to repossess the vehicle.
In Chapter 13, you keep your vehicle, even if the equity in it exceeds your exemptions. If there is a loan on the vehicle, it can be restructured and repaid as part of the Chapter 13 payment plan. If you are behind on your vehicle loan payments, Chapter 13 will prevent the vehicle's repossession.
Leased vehicles normally have no equity and, therefore, you have no equity interest to exempt. However, payments must be made on time or the lessor will seek court permission to repossess the vehicle.
What is the role of the attorney for a consumer debtor in a Chapter 7 case?
Your attorney provides a full range of services throughout the bankruptcy process. In a Chapter 7 case, the attorney:
How do I know the attorney's fee is fair?
The fee paid to an attorney representing a debtor in a Chapter 7 case must be disclosed to the bankruptcy court. The court will allow the attorney to charge and collect only a reasonable fee. In Chapter 7, your fee is collected before the case is filed because otherwise, it would be dischargeable in bankruptcy.