Palm Springs Chapter 7 Bankruptcy Attorney

Filing for a Chapter 7 bankruptcy in Palm Springs can allow you to eliminate your debt and give you a fresh start. Many hardworking people struggle to keep up with their payments. Unforeseen circumstances, such as the COVID-19 pandemic, illness, unemployment, or other hardship, can make filing for Chapter 7 bankruptcy necessary. In most cases, at the end of the Chapter 7 bankruptcy process, the debtor walks away without debts.

If you are struggling to pay your bills, filing for bankruptcy could be an option for you. Christopher Heritage, the founding attorney of Heritage Legal, PC, has extensive experience representing clients through the bankruptcy process. The thought of filing for bankruptcy can seem overwhelming. At Heritage Legal, PC, we will learn more about your financial situation and advise you as to your best option, guiding you through the process. Contact our Palm Springs bankruptcy law firm today to schedule your initial consultation.

Understanding Chapter 7 Bankruptcy

Chapter 7 bankruptcy is also called straight bankruptcy or liquidation bankruptcy. When filing for a Chapter 7 bankruptcy, the debtor does not need to submit a payment plan. Chapter 7 bankruptcies are the most commonly filed type of bankruptcy in the United States. After a Chapter 7 bankruptcy becomes finalized, the bankruptcy court will wipe out most, if not all, of the debtor's debts.

The Benefits of Filing for Chapter 7 Bankruptcy in Palm Springs

Filing for a Chapter 7 bankruptcy can bring about many benefits. First, an individual or business that files for Chapter 7 bankruptcy can discharge unsecured debts, such as the following:

  • Personal loans
  • Charge cards
  • Credit cards
  • Utility bills
  • Medical bills
  • Business debt
  • Payday loans
  • Unpaid taxes that are a minimum of three years old
  • Lawsuits

In many cases, filing for Chapter 7 bankruptcy can achieve the following results:

  • Stop wage garnishments
  • Stop IRS levies
  • Lower debt payments
  • Lower interest rates
  • Stop repossessions
  • Stop foreclosures
  • Stop harassing creditors
  • Eliminate judgments

Eligibility for Chapter 7 Bankruptcy and the Means Test

Only people, corporations, partnerships, or other business entities may file for Chapter 7 bankruptcy. Those who are seeking relief through Chapter 7 bankruptcy must pass the means test. The means test determines whether or not the debtor's income is low enough to qualify to file a Chapter 7 bankruptcy.

Sometimes our clients assume that their income is too high to qualify for a Chapter 7 bankruptcy. Many people are surprised that they will pass the means test. Debtors who do not meet the means test for a Chapter 7 bankruptcy should consider filing for Chapter 13 bankruptcy.

The means test is somewhat complicated. Essentially, if your household income is higher than the state median income, you will not qualify for bankruptcy. If your household income exceeds California's median income, you could still be eligible to file if your disposable income is high enough to pay off at least a portion of your unsecured debts. The legal team at Heritage Legal, PC, can help you determine whether you qualify for Chapter 7 or 13 bankruptcy.

The Role of Trustees in Chapter 7 Bankruptcy

Bankruptcy trustees play a significant role in Chapter 7 bankruptcy. The bankruptcy court will appoint a trustee for the debtor’s case. The trustee will gather all of the paperwork and documents necessary for the bankruptcy. Trustees will also gather all of the property and assets of the debtor that are nonexempt.

After selling the assets, the trustee will pay the debtor's creditors according to the U.S. Bankruptcy Code. Potential debtors should understand that the filing of a Chapter 7 bankruptcy petition can result in losing assets. The advantage of filing for Chapter 7 bankruptcy is that the debtor will walk away from the process with no unsecured debts.

Debtors Have a Right to Keep Exempt Assets

In some cases, our clients are concerned that they will lose all of their assets if they file for Chapter 7 bankruptcy. This is almost always untrue. While it is true that a trustee may need to sell off non-exempt property to pay off your unsecured debt, you will be able to keep most, if not all of your assets and property. Bankruptcy laws allow debtors to take certain bankruptcy exemptions. These exemptions allow you to keep a certain amount of your property after the bankruptcy is over. At Heritage Legal, we can advise you as to how much of your assets you will be able to keep after a Chapter 7 bankruptcy.

California is the only state that uses two exemption systems. In California, debtors are allowed to keep some of the equity in their homes and cars. You will also be allowed to keep jewelry up to a certain amount. Additionally, debtors can usually keep aloof their household items and personal effects. Debtors can also keep a certain amount of jewelry, works of art, and heirlooms.

Debtors can keep 75 percent of their wages within the last thirty days before filing for bankruptcy. Many of our clients are concerned about losing their retirement accounts. However, Chapter 7 debtors are allowed to keep tax-exempt retirement accounts, such as 401(k)s, 403(b)s, money purchase plans, profit-sharing, simple IRA's, and defined benefit plans, to the extent they are “reasonably” necessary for their support.

Disputes Related to Chapter 7 Bankruptcy

When a debtor files a bankruptcy petition, he or she will need to list expenses, income, debts, assets, and recent financial transactions. Debtors, creditors, and other interested parties can contest a Chapter 7 bankruptcy proceeding. For example, creditors may claim that you owe them more than you stated you owe them. As the person filing for bankruptcy, you may also need to challenge the creditor's claims. When Chapter 7 bankruptcies become contested, negotiation and litigation can become necessary.

Contact Our Experienced Palm Springs Bankruptcy Law Firm

At Heritage Legal, PC, we are familiar with all of the aspects of Chapter 7 bankruptcies. We represent clients who are exploring the process of bankruptcy as a way to make a fresh start. After thoroughly reviewing your situation, we can advise you whether filing for bankruptcy may be right. Contact our Palm Springs law firm today to learn how we can help guide you through the process.

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