Chapter 7 bankruptcy Fontana

Your income, expenses, and intentions of surrendering property will determine whether or not you qualify for a chapter 7.  In a chapter 7 case you can discharge all general unsecure debts.

  • Priority claims receive special status under bankruptcy law, and typically include tax liabilities and expenses incurred in the bankruptcy proceeding.
  • Secured debts are those in which the creditor has the right to seize collateral that is securing the underlying debt if the debtor defaults. Examples include mortgages and car loans.
  • Unsecured debts are those for which a creditor has no right to collect against particular property owned by a debtor. Examples include credit card debt and personal loans.

When you file a bankruptcy petition, it imposes something called an “automatic stay.” This is imposed without any judicial action and stops most collection actions against you or your property.

The bankruptcy automatic stay will stall or “stay” any priority unsecured debts until your case is discharged (generally after 90-120 days). Secured creditors are not allowed to repossess property, without permission from the court, even if you are behind on your payments to them.  As long as the stay is in effect, creditors cannot initiate or continue lawsuits, wage garnishments, or even contact the debtor to demand payment. The court will provide notice of the case to all creditors identified by the debtor. The automatic stay also prohibits creditors from attempting to collect a consumer debt that is owed jointly with another person. When you file a Chapter 7 or Chapter 13 petition, the court appoints an impartial Trustee to administer your case. The Trustee is empowered to evaluate the circumstances of your case and serves as a disbursing agent, collecting money from you and making payments to your creditors. The Trustee will also examine your property to see if there are any luxurious items he can sell to pay creditors.  There are other pros and cons to filing a chapter 7 you should discuss with a qualified bankruptcy attorney.

If one makes too much money to qualify for a chapter 7 bankruptcy in California, or they do not want to surrender their property back to secured creditors, they will likely seek a chapter 13 bankruptcy.