Chapter 7

This is what every one thinks of when they think “BANKRUPTCY”.  Some people refer to it as “Total Bankruptcy”.   You need to be careful about filing Chapter 7 if you have more assets than you can exempt and keep in a Chapter 7 bankruptcy filing.  San Jose Bankruptcy Lawyer David Boone can help you review your assets and the bankruptcy exemptions.

Giving away assets or attempting to hide them is a bankruptcy crime.  Bankruptcy Trustees can go after anything you transferred or gave away for less than full value for up to 4 years and in some cases up to 10 years.  Not listing your assets is also a crime.  Don’t take silly advice from your friends.  They will not suffer the consequences, you will be the one suffering.

A Chapter 7 bankruptcy is the classic liquidation – All non-exempt value in a property is given up or bought back from the Chapter 7 Trustee appointed in your case.  But, since there are so many exemptions, most people have no non-exempt property and this is for most people “Screw em all – Keep it all” since the exemptions are more than the average person has anyway!!

You can still keep anything above the exemptions you want if you can make the payments and you pay the trustee the non-exempt net amount, after any costs of sale that would be incurred, that the trustee could get by selling the asset and paying the secured creditors for that asset in full.  (You usually are better to file a Chapter 13 if you have non-exempt assets and pay a small amount to your creditors than try to work something out with a Chapter 7 Trustee.)

To qualify you simply cannot have filed a Chapter 7 within the last eight years.  (You could still file to stop a foreclosure, etc. but no discharge of your unsecured debts.)

Chapter 7 is useful even for people who do not want to keep their home.  It stops foreclosure and gets you debt free, gives you some free rent time to get organized, save money and move.

Chapter 7 also cuts off any liability for deficiency judgments after foreclosure.   If you bought a property in a recourse state like Florida or Texas, lenders can sell the property after they foreclose and then pursue the borrowers for the amount they are still owed after they have foreclosed and sold the house!

Chapter 7 is also the ultimate fresh start!   Dump the debt and get on with your life.  Why try to pay them something when they wanted it yesterday, and you will never pay them enough soon enough.  Many people struggle for years and then have to file for Bankruptcy when illness, job layoffs, divorce, etc. hit them.

The thing most people don’t know is that Bankruptcies clean up your credit – after your discharge the credit reporting people have to wipe out all the negative and now discharged debt and the negative reporting about it.  Your FICO score will improve after Bankruptcy.  So people saying they had no credit after they filed bankruptcy isn’t true.  What is true is that instant credit, that approval while you wait there at the register, is over because bankruptcy is one of the dirty dozen that lenders look for to deny you when you apply for instant credit.  But that is the type off credit you really should never use.

San Jose Bankruptcy Attorney David Boone can thoroughly review your assets and exemptions and give you correct guidance before you file bankruptcy.  Most people have what is called a no-asset case in bankruptcy.  It doesn’t mean that you have no assets.  It means that there are “no assets” for the bankruptcy estate and thus the Chapter 7 Trustee can not take anything from you.

One thing to keep in mind is that the Chapter 7 Trustee technically owns your house until it is abandoned back to you.  The Trustee normally files a no-asset report after the meeting of creditors (341 Meeting) is concluded.  However, the Chapter 7 Trustee can decline to abandon the house back to the Debtor and can sit on it for years before attempting to sell it.  Because of the lack of equity generally lately, many new attorneys to the field have been ignoring this difference between Chapter 7 and Chapter 13.

Appreciation in value after filing belongs to the Chapter 7 Trustee in a Chapter 7, the Debtor is only entitled to receive the amount of the Homestead Exemption, not any excess proceeds if the house is sold.  All appreciation in value of the home belongs to the Debtor in a Chapter 13 and no one can take your home or any other assets from you in a Chapter 13.

So make sure the Chapter 7 is the way to go, before you file.  San Jose Chapter 7 Bankruptcy Lawyer David Boone can review and explain this to you.