What type of debt is discharged in a Chapter 7 bankruptcy?
In a Chapter 7 bankruptcy the court will discharge most types of debt including credit card balances, medical bills and finance company loans. Certain types of debts such as recent income taxes, student loans and child support obligations are not dischargeable.  With respect to secured debts, like a home mortgage or a car loan, debtors have the option to keep the property and keep making the payments, or surrender the property to the lender and discharge the debtor’s liability. One is generally able to keep all of one’s property, unless you have substantial equity in the property beyond what California law allows you to protect.

What does someone need to do to qualify for a Chapter 7 bankruptcy?
If your household income is below the California median, we typically can qualify you for a Chapter 7 bankruptcy. If your household income is more than the California median, than we must calculate your income and expenses in the “Means Test” to determine if you qualify for a Chapter 7.  

Will creditors and collection companies stop calling me once I file for a Chapter 7 bankruptcy?
Once a Chapter 7 petition is filed, the federal bankruptcy law prohibits all collection attempts by your creditors including telephone calls. Approximately thirty days after your case is filed there will be a Creditors Hearing. In most cases, the hearing will last less than five minutes with a court appointed Trustee. It is the trustee's responsibility to see if you have any large assets that could be liquidated to pay your debts, like business equipment or substantial equity in real estate. About twelve weeks after the court appearance you receive the order of discharge of your debts by mail.

How is a Chapter 13 bankruptcy beneficial for a debtor?
A Chapter 13 bankruptcy is very beneficial to the debtor in those situations where an asset or assets need to be protected, such as when a house is in foreclosure or a car is out for repossession.  The Chapter 13 bankruptcy will immediately stop the foreclosure or repossession and all the past due amounts may be put into the Chapter 13 plan and be paid over a 3 to 5 year period. Also, if you make too much income, you may not qualify for a Chapter 7. In this situation the court will require that you pay back a portion or all of your debt.

In a Chapter 13 bankruptcy, a payment plan is approved by the court. The debtor will make monthly payments to a court appointed trustee. The debtor will be required to pay back some or all of your debts over a three to a five year period. The amount of the payment is based on the amount of your income and expenses, and in some cases is as low as $100 per month regardless of the amount of debt that you have. Chapter 13 can also stop repossessions or foreclosures by allowing you three to five years to catch up the back payments through the trustee. You also have the option to surrender the property to be relieved of the debt.

What is Chapter 11 bankruptcy?
The Chapter 11 bankruptcy is many times referred to as Business Debt Reorganization. In a Chapter 11 bankruptcy, the debtor remains in possession of all assets and the ongoing business.  A Chapter 11 bankruptcy will allow your business to recover from its previous poor business decisions. A Chapter 11 bankruptcy allows a business to continue to operate without the day to day burden of their pre-existing debt obligations. It gives the business an opportunity to develop a plan to restructure its debt and to relieve the business of leases and contracts that are economically unfeasible. In a typical Chapter 11 bankruptcy proceeding, management continues to run the day-to-day operation of the business. Many significant business decisions, however, may require court approval, such as liquidating the assets of the business.