Chapter 7

      Chapter 7 bankruptcy (also known as a “straight bankruptcy”) filing will generally result in the discharge of most types of debts including credit card balances, mortgage and automobile deficiencies, personal loans, most civil judgments, collection accounts, and medical bills. There are, however, certain debts that will not be discharged which include student loans, domestic support obligations, fines/penalties arising from a crime or malicious conduct, and debt procured by fraud. Furthermore, a person filing bankruptcy ("debtor") may not receive a Chapter 7 discharge if he or she has received a previous discharge under Chapter 7 in the previous eight years. 

      Both small businesses and individuals may file Chapter 7 bankruptcy. A debtor with primarily consumer debts is eligible to receive a Chapter 7 discharge if he or she passes the Means Test.  To pass the Means Test, the debtor’s average monthly income for the past six months must be less than the California median income as identified by bankruptcy laws or the qualified deductions must place the debtor's income beneath the disposable income threshold.  In addition, even when a debtor does not pass the Means Test, there may be special circumstances that may be taken into consideration to still qualify the debtor for a Chapter 7 bankruptcy.


      When the debt incurred is primarily business debt, a Chapter 7 business bankruptcy filing, may be the best option. In a Chapter 7 business bankruptcy, if the debt is mostly business debt, then the Means Test will not apply. 


Meeting of Creditors
Approximately 4-5 weeks after the petition is filed, a 341 (a) Meeting of Creditors will be held.  At the meeting, the Chapter 7 Trustee will ask the debtor questions about the debtor’s financial affairs and accuracy of the petition. Creditors have the right to be present and ask questions regarding assets and liabilities, however, it is rare when creditors do appear at the meetings. Once the meeting begins, the meeting usually lasts no more than five minutes. Once the meeting is concluded, if there are no objections, the debtor will receive his or her discharge approximately 60 days after the 341(a) meeting.


The court filing fee for a Chapter 7 case is $335 (this amount changes periodically), which must be paid by the debtor when the case is filed. The attorney’s fees we charge for a Chapter 7 petition vary on a case-by-case basis.  Our fees, however, are very reasonable. Additionally, we offer payment plans.