Chapter 7 Bankruptcy
Many people have the misconception that once you declare bankruptcy you will never be able to recover your good credit and will lose all of your assets That fact is, for many there are benefits for declaring bankruptcy. David Johnson, a Salem bankruptcy attorney, can help you determine the best course of action to resolve your financial concerns. David has extensive knowledge regarding financial issues; with his legal assistance you can stop creditors from harassing you, you may completely eliminate your debt all while keeping your home, car and other possessions.
A Chapter 7 bankruptcy process takes about four months from start to finish. It depends on how quickly individuals collect the documents and information necessary for preparing the petition. It also depends on how quickly the client takes the required classes. Two classes are required for anyone declaring bankruptcy. A credit counseling course is taken before filing and the financial management course is taken after filing. Once the petition is filed with the court the debtor has a meeting with the trustee. A trustee is an independent contractor who is appointed to oversee your bankruptcy case. After meeting with the trustee there is a period of sixty days that creditors can object to a discharge. Once that sixty day period has elapsed the bankruptcy court will enter an order discharging your debt.
- Before filing Chapter 7 bankruptcy everyone must complete a Credit Counseling Course.
- Gather all of the necessary paperwork required to apply for bankruptcy.
- Pay stubs for the past 6 months
- Tax returns for the past two years
- The most recent copy of any debt statement
- If you are divorced, a copy of the divorce decree
- Bank statements for the last two months
- Apply the Means Test (The means test looks at your income, your expenses, and debts, to determine whether or not you “have the means” to pay back some of your debts) Don’t worry David would do this for you.
- File bankruptcy petition with the court
- Attend meeting with trustee
- Complete a financial management instructional course
One of the huge benefits of hiring David Johnson as your bankruptcy lawyer is once you are represented by an attorney it is illegal for creditors to contact you. Unfortunately, some creditors do not comply with the law. Keep a log each time they call, and each time tell them you are represented by your attorney, David Johnson. There are lawyers that specialize in suing creditors, and if you keep a detailed log, you will have a good case.
Another situation David can help you with is garnishments. Declaring bankruptcy can stop garnishments. It is best practice to get the payroll department’s fax number to David, so he can fax a notice of bankruptcy directly to your payroll.
One concern for many individuals is how long will it take for their credit score to recover. If debtors are diligent in taking steps to improve their credit, their credit score can be back in the normal range in two years. Steps to improve a credit score include taking a small amount of consumer debt out and consistently repaying that debt. For example, you may get a credit card and each month use it to purchase a tank of gas and then pay the card off each month. You may need to start with a secured credit card. This means you have a deposit account with the credit card company that acts as collateral on your account.
Our clients have questions about buying a house or car after bankruptcy, or will they be able to rent an apartment. The good news is that generally, within two years your credit score will have improved sufficiently that you may be approved for a mortgage. After you file for chapter 7 bankruptcy, your mailbox will be stuffed full of offers to lend money to purchase a car. However, be cautious in accepting these offers. Most likely the interest rate will be astronomical. When it comes to renting an apartment, historically, landlords would not rent to individuals that have filed bankruptcy in the past two years. However, since the financial crisis in 2008 where bankruptcies have become more common place, most landlords will rent to individuals who have filed.
There are some pitfalls to declaring bankruptcy. A debtor in bankruptcy must be honest, forthright, and thorough. If a debtor is dishonest or sloppy in the information they provide, the bankruptcy court or the trustee may try to disqualify the debtor from receiving the discharge. You cannot qualify for another discharge for a period of time. So, it is imperative that you make good use of your fresh start.
Our clients are always concerned about what to expect during their meeting with the trustee.
The bankruptcy court’s website provides a video of a bankruptcy hearing so people can see one before they go. You can view the video here
A Chapter 7 is sometimes called a straight bankruptcy or liquidation bankruptcy. This is because by law debtors are entitled to keep certain property to help them rebuild their life. Your trustee will review all of your property and see if you have property in excess of what you are entitled to keep. If you have excess property, the trustee will sell that property and distribute the proceeds to your creditors.
There are so many benefits for choosing a chapter 7 bankruptcy and choosing David Johnson as your bankruptcy lawyer. Give him a call and find out if it is the right choice for you.