Chapter 7 Bankruptcy
Quick and painless bankruptcy
Chapter 7 is the most common form of bankruptcy which allows a person or married couple to quickly discharge their debts, usually within 4 to 6 months. In most cases, careful planning will allow someone to keep their property and not pay back any creditors.
Creditor Harrassment
What happens to your creditors when you file?
At the first signs of financial trouble, the best step to take is to consult an experienced and reputable bankruptcy lawyer. At Heston & Heston, we devote our practice primarily to bankruptcy with two of our lawyers being Certified Bankruptcy Law Specialists. With over 86 years of combined practice experience, our lawyers are uniquely qualified to seek and obtain the best results possible for clients.
One goal of our bankruptcy practice is to assist clients in dealing with creditor collection actions. Once clients retain our firm, they can refer their creditors to our office which stops the harassing creditor calls. The most effective tool for stopping creditor actions is to file for bankruptcy. When you file bankruptcy, an automatic stay goes into effect that orders all your creditors to stop any collection actions, including:
Collection calls
Levy actions
Wage garnishment
Foreclosure
Repossession
Lawsuits
We are familiar with the strategies and tactics creditors use and employ our own methods to encourage them to stop their harassment and aggressive actions. All creditors must comply with specific laws and procedures when pursuing their collection activities. If necessary and appropriate, we will pursue litigation as a measure necessary to protect our clients' rights.
Eligibility to file a Chapter 7 bankruptcy
Who can file a Chapter 7 bankruptcy?
Is this the best option for me?
Most individuals who have not filed a Chapter 7 case in the past eight years would be eligible to file a Chapter 7 case. Whether that is the best course of action, however, requires a detailed review of a person's debts, assets, income and other matters that impact on their situation. We not only undertake that review for our clients but we also work with our clients to chart a course of action. And although a person may be eligible for Chapter 7, if, for example, they have a house in foreclosure, owe substantial tax debt or have so much property that a Chapter 7 Trustee would likely sell some of it, Chapter 13 or a non-bankruptcy alternative may be better options for this person.
Discharge
What Debts are Discharged?
Most debt can be discharged in a Chapter 7 bankruptcy. We evaluate whether clients are good candidates for Chapter 7 bankruptcy relief after reviewing their assets, debts, income, and other circumstances under the Means Test (the calculation that may force some people into a Chapter 13 bankruptcy). Other non-bankruptcy options will also be discussed.
With a Chapter 7 bankruptcy, most unsecured debt can be discharged, including:
Credit card debt
Medical debt
Personal loans
Judgments
Income tax debts under certain circumstances
Avoiding Judgment Liens
Is Discharging the Judgment Enough?
While the personal liability for a judgment may be wiped out in a bankruptcy, if the creditor had recorded an Abstract of Judgment, unless further action is taken, the judgment lien will remain on real estate and could be paid on the sale or refinancing of the property.
A single person is entitled to a homestead exemption of $75,000, which increases to $100,000 for a married person or single person with dependents and to $175,000 if the person or their spouse is over age 65. People who file bankruptcies can protect the equity in their property to the extent of their homestead exemption by filing a Motion to Avoid a Judicial Lien. Equity is that amount by which the value of the property exceeds the balances owing on the mortgages. So if, for example, a married couple has a house worth $500,000 and a mortgage of $400,000, they can fully avoid a judgment lien. However, if the house is worth $515,000, $15,000 of that judgment lien will remain but the balance can be avoided.
Often people do not discover a judgment lien until months or even years after they receive a discharge. Their case can, however, be reopened to file that Motion to Avoid the Judgment Lien based on the valuation f the home at the time the bankruptcy was filed.