If you have more debt than you can pay off, it is important to seriously consider all of your options, including filing for bankruptcy. Too often, residents of San Leandro avoid filing for bankruptcy because misperceptions or negative stigmas. For example, many people think that it would be impossible to repair their credit after filing for bankruptcy. These broad generalizations miss the mark: for many debtors, bankruptcy provides the much-needed opportunity for a fresh financial start.

What is Chapter 7 Bankruptcy?

There are several different types of bankruptcy, called “chapters” because they are each in a different chapter of the bankruptcy code. Chapter 7 Bankruptcy is a type of liquidation bankruptcy. This means that a debtor who files for Chapter 7 liquidates, or sells, all of their non-exempt assets in order to pay off as much of their debt as possible. In return, all of the debtor’s remaining unsecured debts are wiped away.

Debtors who file for Chapter 7 may be able to save some or all of their assets from liquidation by using California’s system of property exemptions. These exemptions, listed in Sections 704.010-210 of the California Code of Civil Procedure, may be able to protect a debtor’s house, car, and retirement accounts. Residents of San Leandro that do not own their own home may be able to use the wildcard exemption to protect up to $26,925 worth of any assets they choose

Is Chapter 7 Bankruptcy the Right Choice?

The most important consideration in deciding whether to file for Chapter 7 Bankruptcy is to look at whether Chapter 7 can get rid of your debts. Only unsecured debts, or debts that are not accompanied by a creditor’s property interest, are forgiven in Chapter 7. These debts can include:

• Credit cards;
• Medical bills;
• Utility payments;
• Personal loans; and
• Legal bills.

A second important thing to consider is whether you qualify for Chapter 7. In order to qualify for Chapter 7, debtors must pass something called the “Chapter 7 means test.” In order to qualify, debtors in California must either:

1. Have an income lower than the median income for a household of their size in California; or
2. Not have enough disposable income to pay a certain amount of their debt.

In order to determine whether a debtor has too much income to file for Chapter 7, the bankruptcy court will look at the debtor’s disposable income, which is the debtor’s gross income minus certain necessary expenses, such as housing and food.

Contact a Local Bankruptcy Lawyer

If you have large amounts of unsecured debt, Chapter 7 may be a good choice for you. The Law Offices of Melanie Tavare have experience advising debtors in the San Leandro community about Chapter 7 Bankruptcy and, if Chapter 7 is the right choice, helping them through the bankruptcy process. Contact us online or by calling 510-255-4646 to find out more about Chapter 7 Bankruptcy.

The Law Offices of Melanie Tavare is a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.