As far as I’m concerned in my practice as a San Francisco bankruptcy attorney, the question “Should I file for Chapter 7?” is one of the most important ones that I hear. There is a process to go through to determine if you should file for Chapter 7 or Chapter 13.

If you do decide to file for Chapter 7 instead of Chapter 13, the court will decide if you do actually qualify for it. If you do meet the criteria through either a means test or a medium income comparison, then you’ll be allowed to file for Chapter 7. Although the laws have become a bit stricter since 2005 regarding who can file for Chapter 7, due to the fact that much of your debt is discharged rather than paid off as it is in Chapter 13, in my day-to-day work as a San Francisco bankruptcy attorney, I’ve found that it is still a viable choice for many if not most debtors.

With the means test, you subtract standard monthly expenses and debt related expenses from your monthly income and if the remainder is less than specific limits under law, you may file for Chapter 7. With the median income comparison, if your income is under the median for your geographic area, then you may file for Chapter 7. In my practice as a San Francisco bankruptcy attorney, I always emphasize to clients that they do not have to qualify using both methods just one.

Chapter 7 should be considered when your debt is so overwhelming that you cannot foresee paying it off. Under Chapter 7 certain debts are discharged, that is, you are no longer required to pay them back. Additionally, under Chapter 7, you’ll be able to keep a certain amount of your property, which may include your home, vehicle and other types of personal property. You will end up paying back some of your debt as certain assets will be liquidated. But once that process is complete, most other debts are forgiven and you are debt free.

I’ve found in my years of working as a San Francisco bankruptcy lawyer, that Chapter 7 is a sound decision for those who will not be able to repay all of their debt. In other words, for clients without sufficient income who, under the law, will meet some of their obligations through the liquidation of assets and still be able to retain certain other assets. If you need a fresh start and can qualify, then Chapter 7 bankruptcy is the way to go.

If you have any questions regarding Chapter 7 or Chapter 13 Bankruptcy please contact our San Francisco, San Jose or Sacramento office at info@california-bankruptcyattorney.com or at 888-589-1977 for a free consultation.