Helping Consumers Eliminate Debt in Mission Valley and throughout Southern California
If you are struggling to keep up with your bills and are receiving endless calls from angry creditors, it may be time to consider bankruptcy. Filing for Chapter 7 bankruptcy with the help of a skilled legal professional can help you discharge many types of debt and stop damaging collection actions, including wage garnishments and foreclosure.
As a San Diego Chapter 7 bankruptcy lawyer, I am compassionate to the consequences of living with debt and am ready to help you obtain a fresh start. I have over 40 years of experience helping Southern Californians and over 12 years of experience assisting with debt elimination. I am prepared to guide you through the Chapter 7 bankruptcy process. I emphasize careful planning in my practice and can work to minimize the risk of liquidation while maximizing the powerful benefits of filing.
Not everyone will necessarily qualify for Chapter 7 bankruptcy. This type of consumer bankruptcy is intended for individuals with little to no means of repaying creditors. Individuals with substantial disposable income will instead need to file for Chapter 13 bankruptcy, which can also provide powerful relief and eliminate certain types of debt.
Determining whether you qualify for Chapter 7 bankruptcy involves completing California’s Means Test. The Means Test evaluates your current ability to pay.
The first step involves calculating your average income over the past 6 months. If your average income is less than California’s average median income for your household size, you automatically pass the Means Test and can file for Chapter 7 bankruptcy.
If your average income does exceed the state’s average median income, you may still be able to qualify. You will need to determine your current disposable income by subtracting all necessary living expenses from your monthly income. If your disposable income is too high, you will most likely need to file for Chapter 13 bankruptcy. If you have little to no disposable income, however, you will likely qualify for Chapter 7 bankruptcy.
Timing can be extremely important when filing for bankruptcy. If you recently lost considerable income and do not yet qualify for Chapter 7 bankruptcy under the Means Test, it may be advantageous to wait several months, even if it means taking on more debt in the short term. This strategy, which must be carefully executed, will cause your average income to decrease, potentially making you eligible for Chapter 7.
I can help you complete the California Means Test and assess what types of bankruptcy you qualify for. If you are not eligible or if Chapter 7 bankruptcy is not right for you, I can help you explore your options in a Chapter 13 bankruptcy.
Once you have verified your eligibility, you will need to formally “file for bankruptcy.” I can help prepare and file your bankruptcy petition with the appropriate court.
As soon as you file, you will benefit from the “automatic stay,” a court order that pauses all collection actions. You will be temporarily protected from foreclosure, repossession, wage garnishments, and collection lawsuits. In many cases, the automatic stay will remain in effect throughout your bankruptcy filing. For this reason, bankruptcy can be used to stop an imminent collection action like a foreclosure sale.
Next comes the liquidation process. The Trustee assigned to your case will collect and liquidate nonexempt assets to partially repay creditors.
Liquidation can sound scary, as no one wants to lose their property. Fortunately, with careful planning, you can exempt many types of property in a Chapter 7 bankruptcy. Exempt property will be protected from liquidation and will not be sold.
Unlike some states, California does not allow you to exercise federal exemptions. The state does give you the option of choosing one of two exemption schedules. Most will choose “System 1,” but “System 2” can be useful if you wish to keep certain types of valuable property that cannot otherwise be exempted.
In a California Chapter 7 bankruptcy, the System 1 schedule allows you to exempt:
- Up to $600,000 of equity in your home
- Up to $3,325 of equity in your vehicle
- Up to $8,725 in jewelry, artwork, and/or heirlooms
- All personal injury judgment awards necessary for support
- An unlimited number of household items
- All health aids
- Most retirement and pension plans
As a San Diego Chapter 7 bankruptcy attorney, I have years of experience helping clients leverage California exemption schedules. Many of my clients lose nothing to liquidation.
After you have completed the liquidation process, you will generally be permitted to discharge qualifying unsecured debts. Unsecured debts include credit card debt, medical debt, personal loans, and unpaid utility bills. “Discharging” means these debts will effectively be forgiven – you will not need to pay any outstanding amount of a discharged debt.
Chapter 7 bankruptcy does not allow you to discharge secured debts, which include missed mortgage payments and missed car loan payments. You will need to bring those loans current if you wish to protect secured assets from foreclosure or repossession. However, discharging unsecured debts gives many filers the financial resources they need to catch up on these payments.
As a San Diego Chapter 7 bankruptcy lawyer, I can help you strategize on how to make the most of your filing. I understand that liquidation conceptually frightening, but through careful planning, I can help you navigate the process with little to no property loss. In your initial consultation, I can evaluate your financial situation and review what assets will be safe from liquidation and what elements may be vulnerable. I can also help you understand what types of debt you can expect to discharge and develop a strategy for securing your fresh start.