Chapter 7 bankruptcy allows you to eliminate your debts and receive a “Fresh Start”. Chapter 7 bankruptcy is a liquidation in which the trustee collects all your assets and sells any that are not exempt. The trustee sells the assets and pays you, the debtor, any amount exempted. With a commission from the trustee, the net proceeds of the liquidation are distributed to your creditors.
Some debts are not dischargeable in Chapter 7 bankruptcy. These include alimony and child support. In most Chapter 7 cases, the debtor has large credit card debt and other unsecured bills, and very few assets. A Chapter 7 bankruptcy can eliminate most of these debts in the majority of cases.
Reaffirming certain secured debts, such as those for your car, furniture, or house may allow you to keep them. To do so, you must sign a voluntary “Reaffirmation Agreement”. If you decide you want to keep your home, your car, or your furniture and sign a voluntary “Reaffirmation Agreement”, you can’t bankrupt or wipe out that debt for eight years. That debt will remain due and you must continue to repay it as you were required to before bankruptcy. You must bring the debt current in order to reaffirm it. If you are more than three months late, you will have to pay any back payments. You can choose to reaffirm your debts. For example, you could state that you would like to keep the furniture and house but that the car and jewelry should be returned to the Creditors.
Reaffirmation agreements may be canceled within 60 days of the agreement being filed with the Court or upon the Court issuing an Order of Discharge.
- California Chapter 13 Bankruptcy
- California Exemptions
- Chapter 7 versus Chapter 13? Which is better?
- Bankruptcy Process
- Frequently Asked Questions for California bankruptcy
This article was written by Alla Tenina. Alla is one of the best Bankruptcy Attorney in Sherman Oaks, and the founder of Tenina law. She has experience in bankruptcies, real estate planning, and complex tax matters. The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information. This website contains links to other third-party websites. Such links are only for the convenience of the reader, user or browser; the ABA and its members do not recommend or endorse the contents of the third-party sites.