If debt has become unmanageable, Chapter 7 bankruptcy is a process by which most or all of your debts can be discharged — a genuine fresh start. For many people it is the fastest, most complete form of debt relief available, and it is one of the areas our San Diego attorneys handle every day. This page explains what Chapter 7 does, whether you may qualify, what happens to your property, and what the process looks like from your first call to your discharge.
Every case is different, and nothing on this page is a promise about your case. The best way to find out where you stand is a consultation — call (800) 551-7922 or book online.
It stops the collection pressure immediately. The moment your case is filed, the law creates an automatic stay under 11 U.S.C. § 362(a). The automatic stay stops all forms of creditor collection activity — including foreclosures, lawsuits, collection phone calls and letters, wage garnishments, and vehicle repossessions.
It discharges debts. At the end of a successful case the court enters a discharge, which represents the forgiveness of debts so that you can begin a new financial life. The discharge comes with a discharge injunction — a court order prohibiting creditors from ever again trying to collect a debt that was discharged.
It is designed to let you keep your property. Most people who file Chapter 7 are able to keep all of their property. The law is generous about what you are allowed to keep, through protections called exemptions (explained below). Those protections only work when they are properly claimed in your bankruptcy papers — which is a large part of what your attorney does for you.
Chapter 7 has an income-based eligibility screen commonly called the means test. In simple terms, you total your gross income from all sources over the previous six months, average it to a monthly figure, and compare your annualized income to California’s median family income for a household of your size.
Because the median-income figures and allowed expenses change over time, we do not publish a number here that might be out of date. Use our means-test screening tool for a current estimate, or call (800) 551-7922 and we will run a preliminary means-test analysis with you. As a general matter, you also cannot have received a Chapter 7 discharge within the prior eight years.
California protects your property through exemptions — categories of property you are allowed to keep. You can think of exemptions as categories such as home furnishings, clothing, tools of the trade, homestead (equity in your home), and equity in your vehicles. Each item is honestly valued, reported, and then “claimed” as exempt in your papers.
California offers two exemption lists, found in the California Code of Civil Procedure — § 703 and § 704. You must choose one list or the other; you cannot mix and match between them. Which list is better depends on what you own — most importantly whether you have significant equity in a home, which is protected by California’s homestead exemption law (AB 1885). Choosing the right list is one of the most important early decisions in your case, and it is one we make with you.
If an asset’s value exceeds the exemption you can claim, the bankruptcy trustee is allowed to sell it — but the trustee must first pay you the dollar amount of the exemption you claimed, with any remaining proceeds going to your creditors. In practice, careful planning means most of our clients keep what they have.
Debts secured by a lien — a first or second mortgage on your home, or the loan on your car — are treated differently from ordinary unsecured debt. Most liens pass through bankruptcy: the creditor keeps its lien unless there is a way to “avoid” (remove) the lien under the law. You generally have several options for secured property in Chapter 7:
Which option is right depends on your equity, your exemptions, and your goals — exactly the kind of thing we sort out at your consultation.
In our cases, a typical Chapter 7 runs on the order of three to six months from filing to discharge, though your case may differ.
Your case is assigned a trustee, who is impartial and serves as a representative of the creditors. The trustee’s job is to administer the case and to liquidate any nonexempt assets. In practice the trustee reviews your paperwork, conducts the § 341 meeting, and determines whether your assets are fully exempt. When everything you own is protected, the trustee files a “no asset report” with the court — the outcome in the majority of consumer cases. The trustee also has “avoiding powers,” including the ability to set aside certain preferential transfers made to creditors within the 90 days before your case is filed. We work with the local trustees regularly and know what each looks for.
Chapter 7 discharges qualifying debts, usually in a few months, and is generally the right fit when you pass the means test and your debts are mostly unsecured. Chapter 13 instead reorganizes your debts into a repayment plan over three to five years, and can be the better choice when you have regular income and want to catch up on secured debts such as a mortgage. If you do not pass the Chapter 7 means test, you may still be able to file Chapter 13. We help you decide which chapter serves your goals — see our Chapter 13 page or ask us directly.
We have prepared thousands of bankruptcy petitions, and we handle the details so your case runs smoothly. If you want to know whether Chapter 7 is right for you, the next step is a conversation.
Call (800) 551-7922 or book a free consultation.
Most people who file Chapter 7 keep all of their property. California’s exemptions (under Code of Civil Procedure § 703 or § 704, plus the AB 1885 homestead law) protect categories of property such as your home equity, vehicle equity, household goods, and tools of the trade, as long as those exemptions are properly claimed in your papers. Whether a specific asset is fully protected depends on its value and the exemption list you choose, which we review with you at your consultation.
Yes — as soon as your case is filed, the automatic stay under 11 U.S.C. § 362(a) stops collection activity, including collection calls and letters, lawsuits, wage garnishments, vehicle repossessions, and foreclosures.
Chapter 7 uses an income-based “means test” that compares your income to California’s median income for your household size. If you are below the median you generally qualify; if you are above it, you may still qualify after allowed expenses are deducted. Because the figures change, we run a current preliminary means-test analysis with you rather than relying on a published number.
In our cases, a Chapter 7 typically runs about three to six months from filing to discharge, though your case may vary depending on court conditions and the specifics of your case.
Debts secured by a lien are handled separately from unsecured debt. Most liens pass through the bankruptcy, so you generally choose among keeping the property and continuing to pay (and possibly reaffirming the debt), avoiding certain liens that impair an exemption, or surrendering the property. The right option depends on your equity and your goals.
The “341 meeting,” held under Bankruptcy Code § 341, is a brief, informal meeting of creditors — not a court hearing. It is usually the only time you will meet your trustee, and your attorney attends with you after preparing you for the questions to expect.
As a general matter, you cannot receive a Chapter 7 discharge if you already received one within the prior eight years. If you are not currently eligible for Chapter 7, another chapter such as Chapter 13 may be available — we can tell you where you stand.
This page is general information about Chapter 7 bankruptcy, not legal advice, and it does not create an attorney–client relationship. Outcomes depend on your individual circumstances. For advice about your situation, please speak with one of our attorneys.
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