Discharging Your Debt

Irvine Bankruptcy Lawyer

Chapter 7 bankruptcy, also known as "liquidation", is a legal process by which unsecured debts can be discharged or eliminated.  Chapter 7 is known as liquidation because any non-exempt assets the debtor has may be liquidated (sold) by the trustee for the benefit of creditors.  Many people who file Chapter 7 bankruptcy have few assets and are allowed to keep all their important items such as furniture, clothing, personal possession and tools.  In this case there is no liquidation and their unsecured debts are simply discharged (eliminated).  Anyone interested in finding out more about Chapter 7 bankruptcy should call and speak to an Irvine bankruptcy attorney at the Law Offices of Arthur H. Hausmann.  He also services clients residing in Huntington Beach, Costa Mesa, Anaheim and Santa Ana

To qualify for a Chapter 7 bankruptcy a person must first take a Means Test.  This is a way of determining whether a person's total income after expenses is lower than the average income for other families of the same size who live in the surrounding area.  If it is, they will qualify for Chapter 7.  Even if their income is higher than the median income there are additional calculations including a list of allowable deductions that may still enable them to qualify.

Bankruptcy Attorney in Irvine

Once a person qualifies, the entire process will only take between 4 to 6 months to complete.  After the debtor petitions for bankruptcy protection, the court will issue a "stay" order to all their creditors.  This means that all the collection calls and letters will immediately cease.  The debtor will need to appear at one hearing that is attended by their creditors and once that is done, after several months have passed, the bankruptcy trustee will discharge all the unsecured debts and declare the bankruptcy finalized.  While Chapter 7 does discharge all a person's unsecured debts, there are certain debts it cannot eliminate.  Debts such as child support, alimony, past taxes and student loans will still need to be paid.  It is also a requirement that the debtor attend a credit counseling program and this can help establish new financial management habits, such as a budget to prevent the person from making the same mistakes again.

Contact an Irvine Bankruptcy Lawyer to find out how Chapter 7 bankruptcy can discharge a person's debts and give them a fresh start in life.