San Marcos Chapter 7 Bankruptcy Attorney

Expert Debt Relief in San Diego, Riverside, Orange, & Los Angeles

No one should have to live with crushing debt, especially if you have little to no means of repaying what you owe. Fortunately, relief is possible, no matter how dire your financial circumstances may seem.

Our San Marcos Chapter 7 bankruptcy attorney has over 45 years of experience and is ready to help you eliminate debt. We offer compassionate and personalized representation at North County Bankruptcy Clinic, and you will work directly with our attorney throughout our handling of your case. Our team will carefully evaluate your situation, advise whether Chapter 7 bankruptcy is right for you, and guide you through each stage of the filing process. We are committed to helping you obtain a future free of overwhelming debt and will leverage our firm’s resources to set you up for success.  

Contact us online or by calling (760) 444-4262 to speak to one of our Chapter 7 bankruptcy attorneys. We also serve clients in Orange, Los Angeles, Riverside, and San Diego counties. Se habla Español.

What Is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy is also known as straight or liquidation bankruptcy. This is a form of bankruptcy that can clear away unsecured debt. If you are in a situation where you are very behind on bills and do not have any means of being able to afford monthly payments or living expenses, Chapter 7 bankruptcy can be a last resort option.

Chapter 7 bankruptcy provides an opportunity for a fresh start by discharging most unsecured debts, such as credit card debt, medical bills, and personal loans. The process involves a comprehensive assessment of your finances, which may result in the liquidation of nonexempt assets to repay creditors. However, not all assets are subject to liquidation, and many essential items are protected through exemptions. The goal is to relieve overwhelming financial pressure while maintaining a livable standard through protections.

Understanding Bankruptcy Laws

When filing for Chapter 7 bankruptcy in San Marcos, it's essential to understand how California's state-specific laws affect the process. One critical aspect involves the use of the means test to determine eligibility, which compares your average income over six months to the state median for a household of your size. Passing this test is a crucial step in filing for Chapter 7. Additionally, exemptions such as the Homestead Exemption can protect a significant portion of the equity in your home, allowing you to retain important assets during the bankruptcy process.

In San Marcos, the Southern District of California Bankruptcy Court handles many bankruptcy filings. It's essential to be aware of the local court norms and procedures to ensure a smooth filing process. By choosing North County Bankruptcy Clinic, you benefit from our in-depth understanding of these procedures and our commitment to advocating for your best interests at every stage.

Eligibility for Chapter 7 Bankruptcy in California

Not everyone will be eligible to file for Chapter 7 bankruptcy. Chapter 7 relief is intended for people who have limited income and are not able to pay their debts. You will have to complete the California Means Test to determine whether you qualify. 

Compare your current income to the median average income for your household size. If you make less than the median average, you automatically pass the Means Test and qualify for Chapter 7 bankruptcy. 

If you make more than the median average, you may still be eligible. However, you must calculate your current level of disposable income by subtracting qualifying expenses from your gross income. If you have little to nothing left over after these expenses, you likely qualify for Chapter 7 relief. Our San Marcos Chapter 7 bankruptcy attorney can help you complete the Means Test and verify whether you qualify. 

You should also consider the impact of liquidation when evaluating whether to file for Chapter 7 bankruptcy. Any nonexempt assets will be sold, or “liquidated,” to repay creditors. While you will be able to protect many of your most essential assets, certain types of property cannot be exempted. If you have nonexempt property you are unwilling to part with, you may wish to consider Chapter 13 bankruptcy (if you have a high level of disposable income) or bankruptcy alternatives.

How To File for Chapter 7 Bankruptcy

Filing for bankruptcy can be a complicated procedure, but it can also offer much-needed relief if you are drowning in debt. If you are thinking about filing for Chapter 7 bankruptcy, below are the steps you must take:

1. Determine whether Chapter 7 is the best option: Chapter 7 bankruptcy discharges the majority of your unsecured debts, such as credit card debt and medical costs. However, not everyone is eligible for it, and depending on your circumstances, it might not work for you. Consult with a San Marcos Chapter 7 lawyer at North County Bankruptcy Clinicto learn more about your options.
2. Complete a mandatory credit counseling course: You must first finish a credit counseling course from an approved provider. This course will help you understand your alternatives and create a debt management plan.
3. Collect your financial data: You must supply specific information about your income, expenses, debts, and assets in the Chapter 7 paperwork. Be sure to have all relevant documents about your bank accounts, investments, and property ready.
4. File your Chapter 7 bankruptcy petition: When you’re finished with credit counseling and have compiled your financial information, you can file a Chapter 7 bankruptcy petition with the court. This petition will start the bankruptcy process and halt most collection efforts against you (also known as an “automatic stay”).
5. Cooperate with the trustee: A bankruptcy trustee will be assigned to your case and will interact directly with you and your creditors. They may ask questions or seek additional paperwork if necessary.
6. Liquidation of property: This will be handled by your trustee. They will decide whether some of your assets are worth selling so the revenues can be used to repay your creditors. However, not all of your assets will be sold; there are exceptions.
7. Attend the 341 meeting of creditors: This meeting is an opportunity for the creditors to ask questions about your assets and liabilities or your right to a discharge. It typically takes 5 minutes or less, and in some cases, the creditors will not appear.
8. Complete a debtor education course: Your course must be from an approved provider. The course will help teach you financial management skills and help prepare you for life following the bankruptcy.

Key Differences Between Chapter 7 & Chapter 13 Bankruptcy

While Chapter 7 and Chapter 13 are both viable options for debt relief and they offer a fresh financial start once the debt is cleared. However, they each have a different approach.

The following are the main differences between Chapter 7 and Chapter 13 bankruptcy:

• Types of bankruptcy – As we have mentioned earlier, Chapter 7 is commonly known as liquidation bankruptcy, which involves selling some or all of your assets to pay off your debts. Chapter 13, on the other hand, is also known as “reorganization” bankruptcy, which allows you to complete a court-mandated repayment plan and the chance to keep your property.
• Eligibility – In order to file for Chapter 7, your disposable income needs to be low enough to pass the means test. If your income is more than what is required to pass the means test, then you can still be eligible to file for Chapter 13.
• Timeline – Debts can be discharged within three to four months through Chapter 7. In contrast, you must complete the payment plan to have the debts discharged with Chapter 13. The repayment plan generally lasts between three to five years.
• Property – In Chapter 7, trustees can pay creditors by selling all nonexempt assets. In Chapter 13, debtors can keep all their property if they pay unsecured creditors an amount that is equal to the value of their nonexempt property.

Chapter 7 bankruptcy often suits individuals who have limited income and need rapid discharge of debts, as it allows for a relatively quick resolution, often spanning just a few months. However, it does necessitate sacrificing some nonexempt assets. Chapter 13, meanwhile, tends to benefit those who have a reliable income source and can adhere to a structured repayment schedule that grants them the ability to retain their property while making periodic payments.

Struggling with debt? Our Chapter 7 bankruptcy attorney in San Marcos is here to help. Call (760) 444-4262 or contact us online for your free consultation!