The Advantages of Chapter 7 Bankruptcy

Both Chapter 7 and Chapter 13 bankruptcy offer great benefits to those seeking a way out after their finances went out of control. However, bankruptcy lawyers in Oceanside report that most debtors reach out to Chapter 7 bankruptcy. After all, it eliminates most debt. But what is bankruptcy Chapter 7 and which are its most important advantages? Let’s find out!

Gives you a fresh start

Chapter 7 bankruptcy will erase all your unsecured debt so you can truly get a new start and gradually rebuild your credit rating and your finances. Once your filing goes through, you will be free from paying high-interest credit card payments, costly medical bills and other debts that have no collateral backing.

Certain types of debt, however, cannot be discharged. They are called secured debts. What is bankruptcy Chapter 7 unable to wipe out? Certain taxes, alimony and child support, fraudulent debts, criminal fines, student loans (unless the court rules otherwise), etc.

Puts an end to the phone calls

Having to put up with zealous creditors calling to ask about your payment surely is frustrating. If you are unable to reach an agreement with your creditors, there’s a big chance you will have to deal with a lawsuit and/or a harassing collection agency.

The law prohibits any harassment, oppression or abuse by creditors, debt buyers and collection agencies. Therefore, it’s best to seek legal counsel from a bankruptcy attorney serving Oceanside and neighboring areas. What is bankruptcy Chapter 7 lawyer able to help you with? They will handle your bankruptcy filing and the whole case from start to finish, providing you with thorough and competent legal advice.

Once you file for bankruptcy, you will be granted an injunction against bill collectors and creditors. The automatic stay will stop any foreclosure proceedings, lawsuits filed by a creditor or other individual or entity seeking money from you. No more collection calls!

Quickly discharges your debts

Most debtors want their case to be over as quickly as possible and that is exactly what they get when they file for Chapter 7 bankruptcy. The entire process usually lasts between two and five months.

It takes approximately 60 to 90 days for the bankruptcy court to issue a discharge order after you file for bankruptcy. You will be assigned a trustee, who will distribute your property to unsecured debt collectors. After that, your case will be closed.

No minimum debt limit

If your debt exceeds a certain amount, you aren’t eligible for Chapter 13 bankruptcy but when it comes to Chapter 7, your debts can never be too high to qualify. There is no limit on the amount of secured or unsecured debt a filer may have. However, to qualify for Chapter 7, you need to meet an income limitation.

No repayment plan

Under Chapter 7 bankruptcy, debtors are not required to repay debt through a three- to five-year repayment plan approved by the court. After the unsecured debt is discharged, the debtor is no longer responsible for replaying it.

Doesn’t include your future income

The court will examine and evaluate your income in the last six months until the moment you filed for bankruptcy. Anything you made afterward will not be involved in the bankruptcy estate.

There are only a few exceptions, such as inherited property, the proceeds from a life insurance policy, death benefits, and assets from a settlement agreement or divorce acquired within 180 days after filing.

What is bankruptcy Chapter 7 and how can you benefit from the filing?

What is bankruptcy Chapter 7? How do I file? Are there any other, more favorable my options? Your trusted San Diego and Riverside County bankruptcy law firm of Chang & Diamond, APC has all the answers!

Schedule a consultation and we will provide information about anything related to both Chapter 7 and Chapter 13 bankruptcy concerning your case. Our well-versed bankruptcy lawyers will guide you through each and every step of the process.

What Happens to a Bankruptcy Case in the Event of the Debtor’s Death?

Death is something we simply cannot plan for. But what happens if debtor files for bankruptcy and dies before the discharge? Is the case automatically discharged? Are their heirs affected in any way and how?

The answers to these questions vary depending on whether the debtor filed for Chapter 7 or Chapter 13 bankruptcy. In this article, the leading bankruptcy lawyers in Encinitas explain what happens to a bankruptcy case after a debtor’s untimely death.

Chapter 7

If a debtor dies during a Chapter 7 bankruptcy process, their death does not affect the case. As you already know, in a Chapter 7 bankruptcy a trustee is in charge of selling the debtor’s assets in order to settle the debt. Since the trustee is in charge of the bankruptcy estate, the debtor does not need to be involved in the case.

In the case of the debtor’s death, the trustee can keep selling the assets in order to repay the deceased’s debt. In some cases, a trustee can choose to abandon assets they think are not instrumental in paying off the debt and can do so without the debtor’s consent.

The court discharges the debts as if the debtor were alive. Meanwhile, the trustee is still in charge of the bankruptcy estate. This has many benefits for the debtor’s family, as the creditors cannot make any claims against the estate because the deceased’s debts are discharged.

Chapter 13

In the case of a Chapter 13 bankruptcy, the debtor repays the creditors on a monthly basis as a part of a repayment plan. This repayment plan can take anywhere between three to five years. In Chapter 13 bankruptcy, however, the debtors get to keep their assets.

Unlike with Chapter 7 bankruptcy, the debtor pays a larger role in Chapter 13 bankruptcy cases. In Chapter 13 bankruptcy they have to make the monthly payments from their disposable income. This is why the case does not automatically continue and the court has the power to dismiss it. Additionally, the debtor’s heirs can choose to inherit the repayment plan and continue repaying the debt.

A number of factors will determine whether the debtor’s heirs will continue with the deceased one’s Chapter 13 case. These factors include how long the case will last, the amount of debt, what happens to secured property and whether they can keep it outside of the bankruptcy case.

If the deceased had a mortgage, the lender must make an agreement with the deceased’s heirs to transfer the mortgage to their name. If the deceased filed for Chapter 13 bankruptcy while facing foreclosure, the heirs have to decide whether they want to repay the debt through Chapter 13 bankruptcy and keep the home. The heirs also have the option of refinancing the property and dismissing the bankruptcy case. Finally, they can choose not to keep the house and dismiss the case.

If the debtor had other secured debts their heirs can purchase or refinance, they can dismiss the case and work with the lenders to pay the asset off outside of bankruptcy. The heirs can also continue with the case and claim various benefits like lien avoidance or cramdowns.

Finally, if the deceased debtor had a large amount of unsecured debt, like medical bills or credit cards, their heirs aren’t held accountable. However, they can seek payment from the deceased debtor’s estate. In this case they have to continue the bankruptcy case to secure a larger estate. In case there are no significant assets to inherit, the family can choose to dismiss the case.

Ask the Leading Bankruptcy Lawyers in Encinitas

If you have any questions regarding your bankruptcy case or if you are looking for an experienced attorney to plan for your bankruptcy reach out to Chang & Diamond, APC. For a free initial consultation contact us at (619) 312-4900 or (800) 718-8118.