Chapter 7 FAQ’s

The following questions are frequently encountered by The Los Angeles Bankruptcy Firm in its practice helping people in Southern California find a fresh start through Chapter 7 bankruptcy. If you have other questions or require immediate assistance with a Chapter 7 bankruptcy, contact us today for a free consultation.

Q. What does it take to be eligible to file for Chapter 7?
A. If your household income is below the state median amount, you can file Chapter 7. Otherwise, a complicated means test is used to determine whether your disposable income (income after allowed expenses) is insufficient to meet your debt obligations.

Q. What is a “no-asset” bankruptcy?
A. Since Chapter 7 allows you to exempt several types of assets from sale, it is likely that you might not have any assets subject to liquidation. In this case, the court proceeds to discharge all of your dischargeable debts without requiring you to sell any assets. This is commonly known as a no-asset bankruptcy.

Q. Is there any way to remove the bankruptcy from my credit report?
A. The bankruptcy will be removed from your credit report after ten years from the date of discharge. It cannot be removed early, and any credit repair agency that promises otherwise may not be trustworthy. While the bankruptcy is on your credit report, it may be difficult to obtain a credit card or loan on favorable terms, although there are steps you can take toward rebuilding your credit even while the bankruptcy is on your credit report.

Q. I received a bankruptcy discharge four years ago due to overwhelming credit card debt. A few months ago I was seriously injured in a car accident. I lost my job and can’t pay my bills. Can I file for another bankruptcy?
A. Unfortunately, you may not file for bankruptcy within eight years of filing a previous Chapter 7 discharge. However, you may be eligible to file for a Chapter 13 if more than four years has elapsed since your Chapter 7 discharge.

Q. Will I be able to save my home?
A. Filing any kind of bankruptcy immediately stops a pending foreclosure. The law allows you to exempt a certain amount of equity in your home. If you have a substantial amount of equity and are behind in payments, you may want to consider filing for Chapter 13 instead.