BANKRUPTCY LAW SERVICES

Two of the most common types of bankruptcies available to individuals seeking relief from debt are chapter 7 and chapter 13. Our office deals mainly with chapter 7 bankruptcy cases. However we are happy to set up a consultation with you to discuss your options. If you are unable to file a chapter 7 bankruptcy, we will assist you in finding an attorney that can file a chapter 13 case for you.

If you are considering filing for bankruptcy, you’re not alone. Millions of Americans are turning to the bankruptcy system for relief in these difficult economic times. Many may have been counting on their home equity to help them with their debt, only to find out that they owe more on their home than it is worth. Still others have been derailed by major life changes or events such as divorce, job loss, or health problems. We will take the time to discuss your situation with you, and learn how we can help you in this difficult time.

Bankruptcy has both its advantages and disadvantages. Bankruptcy gives you a chance to make a fresh start in life by allowing you to have certain debts wiped out. Bankruptcy is a process based on forgiveness of debt rather than punishment. It frees up income and resources to allow you a fresh start and a renewed positive outlook on life. On the other hand, the bankruptcy process is intrusive and requires scrupulous detail in terms of the documents to be filed with the bankruptcy court. Additionally, your bankruptcy case will stay on your credit report for up to ten years.

What is a Chapter 7 Bankruptcy Case?

The Bankruptcy Code is a federal law that deals with bankruptcy. A specially created court – The Bankruptcy Court – oversees bankruptcy cases filed in a particular district. In Colorado, the Bankruptcy Court is located in Denver. A Chapter 7 Bankruptcy Case refers to that part of the Bankruptcy code that deals with liquidation or discharge of consumer debt. Any person who resides in the United States is permitted to file a chapter 7 bankruptcy case. To be eligible for a chapter 7 bankruptcy a person must qualify for chapter 7 relief under the “means test”.

What is the means test?

The means test is a method used to determine if a person qualifies to file a chapter 7 bankruptcy. Under the means test a person’s current monthly income from all sources is multiplied by twelve, to see if it exceeds the median annual income for that person’s state and family size. If that person’s monthly income does not exceed the median family income, then chapter 7 bankruptcy may be the best option for that person. If a consumer’s monthly income exceeds the medium family income, then the means test calculation occurs to see whether you can afford to pay off some of your debt, If you do qualify to pay off some of your debts then you might consider file a chapter 13 bankruptcy.

What debts are/are not discharged in a chapter 7 bankruptcy case?

The following unsecured debts may be completely wiped out in a chapter 7 bankruptcy:

Credit card balances
Medical bills
Auto accident and negligence claims
Judgments
Business debts
Taxes and penalties going back more than three years

The following debts are not discharged in a chapter 7 bankruptcy:

Student Loans
Recent taxes
Child support or spousal support obligation
Divorce property settlement obligations to a former spouse
Loans obtained under false pretenses
Court fines and criminal restitution

The law requires you to attend credit counseling and financial management courses

Prior to filing your bankruptcy case the law requires that you attend a credit counseling class within 180 days of your filing a bankruptcy case. The class may occur in person, by telephone or by internet. Additionally, after your case is filed you must attend an instructional course in financial management as a condition of receiving your debt discharge. A complete list of trustee approved agencies can be found at http://www.justice.gov/ust/eo/bapcpa/ccde/cc_approved.htm

What is the process of a chapter 7 bankruptcy?

Chapter 7 bankruptcy cases are started by filing a Petition for Bankruptcy in the United States Bankruptcy Court located in Denver. Your bankruptcy petition generally contains a complete list of your assets, debts, creditors, income, expenses, and the means test calculation.

Once your case is filed creditors are prevented from contacting you or taking collection actions against you, unless they first ask permission from the Bankruptcy Court. The Court assigns a bankruptcy trustee to your case. A creditors meeting with the trustee, called a 341 creditors meeting, is typically set 30 days from the date of filing of the petition. You must provide the trustee with a copy of the last two years of tax returns two weeks prior to the creditors meeting.

The bankruptcy trustee is present at the 341 creditors meeting. Creditors also have a right to attend the creditors meeting, though they rarely do so.

Generally, within six months after your bankruptcy case was first filed, you will receive an order of discharge in the mail from the Bankruptcy Court. This order wipes out all your debts that can be legally discharged and that were listed on your bankruptcy petition.

405 South Cascade Avenue, Suite 102
Colorado Springs, Colorado
(719) 630-3088