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What Does Chapter 7 Do

The overwhelming majority of bankruptcy cases are filed under Chapter 7 of the Bankruptcy Code. The actual percentage of cases that are filed as Chapter 7 cases is around 95% in most jurisdictions, including San Diego. Chapter 7 gets right to the heart of bankruptcy relief for the average person. Let’s take a look at why that’s the case.

The Automatic Stay Stops Creditors

The filing of your Chapter 7 bankruptcy case creates an immediate “injunction” that the bankruptcy law calls the “automatic stay.” It is found in the law at Title 11, United States Code, Section 362(a). It stops all forms of creditor collection activity including foreclosures, lawsuits, phone calls and letters to collect debts, wage garnishments, auto repossessions and so on. Everything stops.

This automatic stay is designed to allow all or virtually all of the claims against you to be handled in one place: the Bankruptcy Court. It stops all creditors from trying to enforce their claims and instead to bring their claims to the Court you have chosen to be resolved. And in most cases, creditors’ claims are resolved when they Trustee reports that you have no available assets for payment—so claimants receive nothing and must move on to bothering other people.

There are some limited exceptions when the automatic stay may not apply and you can discuss these with your lawyer so that you know how a Chapter 7 bankruptcy filing will actually affect you. One limited example of a court proceeding outside of bankruptcy that might not be stopped is a child custody proceeding. But for the most part, your financial life will suddenly get simple and the stress will disappear because of the automatic stay.

The Discharge Of Debts Lets You Start Over

The “fresh start” provided by a Chapter 7 bankruptcy case comes from the discharge of debts that you receive when your case is completed—generally 3 to 4 months after you file. The discharge is the essence of bankruptcy relief because it represents the forgiveness of debts in order that you can start a new financial life. And the law also provides a “discharge injunction” that acts as a Court order prohibiting creditors from ever seeking to collect a debt that was discharged in your case.

The Bankruptcy law allows an individual a discharge once every 8 years. It is not uncommon to see people with credit card debts equaling and exceeding their annual incomes—sometimes even having double or triple their income in credit card debts. There is just no realistic way such debts can be repaid. Others may have overwhelming medical bills or losses from a business that prevent them from having any kind of viable financial life. So the bankruptcy discharge allows people to move on and to re-establish new credit that can be reasonably and properly repaid.

What the bankruptcy law requires in return for the discharge is that you are open and honest about your property and your past financial dealings. The Bankruptcy law will not countenance dishonesty and there are serious consequences for those who try to lie or shortcut the system. But the good news is that the law, with some proper planning and analysis, allows most people who file Chapter 7 bankruptcy to keep all of their property.

There are a few exceptions to the bankruptcy discharge. When you speak with your attorney, you’ll find out if you have a debt that may not be discharged in bankruptcy. These may include certain student loans, some taxes and some debts incurred by fraud or bad acts. If any of these apply to you, then an expert bankruptcy lawyer will show you the best options for handling such debts and still gaining an important measure of relief from all of your other obligations.

Keep Your Property With Exemptions

In order to make the “fresh start” in Bankruptcy meaningful, the law is generous concerning the property that you are allowed to keep. The Bankruptcy law provides categories of property called “exemptions” that you may “claim” and then protect or keep for your own use and enjoyment. As you might expect, the law will protect generous amounts of personal property and furnishings as well as equity in your home. Equity in your vehicles may also be protected.

One key aspect of these exemptions is that they must be properly “claimed” in your Bankruptcy papers by you and your lawyer. If this is not done properly, you will face additional delays and you may even lose property that could have been saved if it was properly claimed as exempt. The laws and the rules that apply are very detailed and involve both Federal Bankruptcy law and the State laws for your current or recent home(s). An expert bankruptcy lawyer will understand the detailed rules that apply. An inexperienced lawyer or paralegal will likely make mistakes. Learn more about how exemptions work here.

A Chapter 7 bankruptcy filing in San Diego will stop your creditors in their tracks, get you a discharge of your debts and will also likely protect all of your property. To protect your property with proper planning, and to avoid critical mistakes that may cause you to lose the relief you deserve, talk to an experienced expert San Diego bankruptcy lawyer. Call us at 1-(800)-551-7922.

See What Our Clients Have To Say

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Roger C.

I reached out to BLC to help assist with a chapter 7 business bankruptcy and they provided excellent guidance, advice, and support through the entire process. In my case an adversarial action was filed by one of the creditors and attorney Ahren Tiller and his staff provided sound ...arguments which prevailed. Couldn’t have found a more experienced and supportive team to represent me in a tricky situation. I would highly recommend them to anyone making the difficult but sometime necessary decision to find financial relief. Read more
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Justin R.

Like many others before and during the pandemic, life happenings caused me to be in a financial situation to warrant bankruptcy. The BLC was super professional all the way through the entire process. Right after I paid for my Bankruptcy, I got sick and had to have surgery and recovery. Then we ...were in full Pandemic mode. They were gracious to delay my filing until I was recovered and ready to file. I could not ask for more. The process was over all quick and painless for a simple Bankruptcy like mine. I feel a weight has been lifted and I can rebuild. Thank you for all your arduous work and patience, Gabriel, Ahren, and their teams are knowledgeable and efficient. Read more
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Katey Huntley

Responsive, friendly, kind, extremely easy to work with! So knowledgeable and made this entire process painless. Very grateful!

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Lynn Molina

Gabriel Hanna, Esq and the staff at BLC helped me in a very difficult time. I appreciate all the help and care they gave my case.

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Linda Cramer

I can’t say enough of how much this bankruptcy law firm helped me with my financial situation. They were all so helpful, efficient and made the difficult time and process as quick and easy as possible. I would recommend them to anyone I know and am glad to give my public recommendation as well. T...hey truly deserve a five star plus rating. Read more
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Andrea N.

I am very happy with my experience with BLC. Bankruptcy is not something anyone wants to go through, however everyone at BLC made my experience pleasant and easy. The process was explained thoroughly and I had an easy time reaching out and connecting with my attorney. Anika Renaud-Kim was my attorney ...and she was nothing short of amazing! She was very patient and generous with her time. Ms. Renaud-Kim definitely made me feel at ease and comfortable through the entire process. Read more
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Lidia Paramore

they did a great job for me, helped me anytime I needed something, my Lawyer Gabriel Hanna is the best, gave lots of confidence all the time..thanks BLC I will.always recommend you, I’m very grateful for your service!!!

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Rachael C.

When searching for information I had called a few different firms and received consults. BLC was the only one who didn’t shy away and provided answers and information during the consult. Once I agreed to move forward, they were supportive, informative, and eased my anxiety through the whole process.... I can’t recommend them enough. Read more
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Emily Martinez

AmazingI had many questions and uncertainties and the carefully explained it all and made it easy to understand. They facilitated a fast and easy process making this scary difficult thing simple

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Legal Disclaimer: The Bankruptcy Law Center is a California Licensed law firm with attorneys licensed in the state of CA, NY. Attorney Ahren Tiller is responsible for this advertisement. Bankruptcy Law Center’s principal office is located at 1230 Columbia st. Suite 850 San Diego, CA 92101. Prior results listed on this site do not depict or in any way infer a prediction or outcome.We are a debt relief agency proudly providing options to people with financial problems. View our Privacy Policy

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