“Under Chapter 7 Bankruptcy, you may discharge debts and have control within a few months.”

Filing for bankruptcy is a complex process that requires through attention to detail, in-depth knowledge of the law, and experience. The Bankruptcy attorneys at Denver – based Parkes Law Group, LLC understand fully how top operate the legal tool known as Chapter 7 Bankruptcy.  We offer high value legal services. The bankruptcy law recognizes that tough financial times happen to good people. Our attorneys know the law and are here to help you utilize the bankruptcy legal process in order to get through tough times.

Chapter 7 Bankruptcy eligibility in Denver, Colorado or anywhere else changed in 2005.  Now, you must qualify to file Chapter 7 bankruptcy by meeting certain income requirements or pass the Chapter 7 “means test.” If the debtor is unable to pass the means test, he or she may not file for bankruptcy under Chapter 7, in which case our Bankruptcy offices in Denver can also inform you about – Chapter 13 Bankruptcy.  You can still regain control of your finances with a Chapter 13 Bankruptcy if you do not qualify for a Chapter 7 Bankruptcy.

Liquidation Bankruptcy

Chapter 7 bankruptcy is sometimes called “liquidation bankruptcy.” It requires the debtor to fully disclose and, in some cases, to liquidate specific non-exempt assets. In exchange, most of the debtor’s debts could be discharged, although some debts cannot be discharged. All non-exempt personal or real property of the debtor could be sold by the Chapter 7 Bankruptcy Trustee, and the proceeds are distributed to the creditors.

In most Chapter 7 bankruptcy cases, the debtors have no assets to lose. These are known as “no-asset cases.” In this way a “fresh start” happens faster, sometimes less than 4 months from the date of filing. If you are a debtor with unsecured debts, such as credit card debts or medical bills, or if you have personal assets, real properties, or business assets you are willing to liquidate in exchange for a bankruptcy discharge of your personal or business debts, it may be in your best option to file for Chapter 7 bankruptcy. Our Denver bankruptcy attorneys are experienced and ready to help you. Call us now at (303) 781-1533 to set up a confidential, free initial consultation and quickly determine whether you meet the Chapter 7 bankruptcy eligibility requirements.

The Chapter 7 Means Test

In 2005, the law changed. Now, the “means test” is required to file Chapter 7 bankruptcy. The Chapter 7 “means test” acts as a filter allowing only those debtors who truly cannot pay their debts access to file for bankruptcy under Chapter 7. Sometimes people do not pass the chapter 7 means test. If this happens, Chapter 13 bankruptcy is available. Chapter 13 bankruptcy is another legal tool for debt-relief.

The Chapter 7 means test determines whether a debtor has enough disposable income to pay off his or her debts. It deducts “allowable” monthly expenses from the debtor’s current monthly income to determine his or her monthly “disposable income.” Generally, failing the means test prevents debtors from filing for Chapter 7 bankruptcy. In such cases, the debtor will be limited to filing for Chapter 13 bankruptcy.

Chapter 13 bankruptcy requires the debtor to propose a repayment plan to pay off only some debts. Chapter 7 bankruptcy has no repayment plan: most of the unsecured debts are wiped out altogether under Chapter 7 bankruptcy. Both Chapter 7 bankruptcy and Chapter 13 bankruptcy have their pros and cons. Many debtors who are eligible for filing Chapter 7 bankruptcy after passing the means test find Chapter 13 bankruptcy as a better option. It all depends on the individual and the specifics of the case.

Only debtors with primarily consumer (personal) debts rather than business debts need to take the Chapter 7 means test. If your income is less than the median income for a household of your size in your state, you have passed the means test.

If you earn more than the median income, however, you must determine if you would have enough income left over (the “disposable income”) to repay some of your debt after subtracting certain allowed monthly expenses. This means your alternative bankruptcy option is to file under Chapter 13 bankruptcy, which allows you to propose a repayment plan to pay back at least some of your unsecured debt. Chapter 13 bankruptcy is also a viable option for debtors to cure their mortgage defaults and to stop a foreclosure.

At Parkes Law Group, our attorneys will help you determine whether you would pass the means test and whether you are eligible to file for Chapter 7 bankruptcy. Median income levels vary by household size and state, and each region has different allowed amounts for certain expenses such as necessities, vehicle, housing, childcare, etc. Call us to set up a free consultation to get a more informed understanding of the means test and its implication on your bankruptcy case.

Exempt Assets Versus Non-Exempt Assets

Colorado laws allow debtors to protect certain personal asset or real property in a Chapter 7 bankruptcy. Protected asset is called “exempt asset.” Non-protected asset is called “non-exempt asset.” The Chapter 7 Bankruptcy Trustee may request turnover of all non-exempt assets. Once turned-over, the non-exempt asset is liquidated and its proceeds distributed to the creditors. When the debtor attends the meeting of creditors, the Chapter 7 Bankruptcy Trustee will examine, among other things, the debtor’s bankruptcy petition and related schedules, bank statements, paystubs, and tax returns to determine if any asset can be liquidated.

Our Denver bankruptcy attorney assigned to work on your case will be there at the meeting of creditors with you. Our bankruptcy attorney will ensure that your personal assets or real property are protected by the applicable exemptions if you decide to file for Chapter 7 bankruptcy.

Chapter 7 Bankruptcy Trustee

The National Association of Bankruptcy Trustees describes a Chapter 7 Bankruptcy Trustee as one who “works primarily for the benefit of the Debtor’s unsecured creditors.” Bankruptcy trustees are licensed attorneys.

The bankruptcy trustee assigned to administer a Chapter 7 bankruptcy case will examine the debtor’s voluntary petition, schedules, and the statement of financial affairs. They will also scrutinize public records, tax returns, financial account statements, writs of garnishment, court pleadings, and appraisals of secured property. The trustee will ask the Chapter 7 debtor questions under oath and try to liquidate any non-exempt asset of the debtor in order to pay back the creditors. It is crucial that a debtor is represented by a bankruptcy attorney when dealing with the Chapter 7 Bankruptcy Trustee.

§ 341(a) Meeting of Creditors

The meeting of creditors, also known as the § 341 Meeting, allows the creditors a fair opportunity to question the Chapter 7 debtor. The creditors are not obliged to attend this meeting, so they do not always appear. The Chapter 7 debtor, however, must appear at the meeting. The Chapter 7 Bankruptcy Trustee will ask the debtor questions under oath about assets and liabilities.

Automatic Stay Under Chapter 7 Bankruptcy

The protection of the bankruptcy law known as the “automatic stay” goes into effect immediately upon filing of a Chapter 7 bankruptcy case. The automatic stay will force all collections activities to stop, including harassing creditor phone calls, collection letters, garnishments, foreclosures, repossessions, and civil lawsuits for debt collection.

A creditor can ask a bankruptcy judge to lift the automatic stay protection with a showing of good reason. The automatic stay remains in effect until it is lifted or until the Chapter 7 bankruptcy case is over and the debt is discharged. If the debt is discharged, the creditors will have no grounds to harass or call the debtor anymore because they now have no debts to collect.

Discharge of Certain Debts Under Chapter 7 Bankruptcy

Dischargeable debts include personal loans, credit card debts, auto accident claims, medical bills, bank overdrafts, unsecured signature loans, civil judgments, civil claims, certain business debts, promissory notes and personal guaranties, repossession and foreclosure deficiencies, certain tax debts, and HOA dues before foreclosure.

Chapter 7 Bankruptcy: Non-Dischargeable Debts

Non-dischargeable debts include student loans, most tax debts, court-ordered child support obligations, alimony, maintenance or support of a spouse, employee’s wage claims, any cash, financial or personal goods and services obtained by fraud, goods and services acquired shortly before filing a Chapter 7 bankruptcy, and injury to the person of another.

Negotiation of Debts Under Chapter 7 Bankruptcy

When you are facing foreclosure, repossession, wage garnishment, harassment calls from creditors, or other collection attempts, you could use the legal help of our Denver bankruptcy attorneys. There are certain federal laws that protect debtors from creditors’ harassment. When a bankruptcy attorney has been retained, the creditors are no longer permitted to make contact. This protection can give you some breathing room to negotiate your debts. Further, licensed bankruptcy attorneys have the tools and option to file for a bankruptcy case on your behalf. This can be used as a shield to gain leverage during debt negotiation with the creditors.

It is highly advisable that you hire an attorney to negotiate debt for you. Creditors, collection agencies, and collection attorneys can be aggressive and uncooperative towards the debtor. Their harassment can be emotionally trying, time consuming, and energy draining. The creditors make it difficult for the debtor to communicate with them directly. They are often relentless and downright mean. When our Denver bankruptcy attorneys contact a creditor on your behalf, they know that we are equipped with legal weapons and shields to negotiate. Often times the creditors will decide that accepting a settlement offer is better than getting nothing at all if a Chapter 7 bankruptcy case is filed. This will sometimes allow them to write off your debt as a loss for their business. It would also allow you to get back on your feet without much turbulence.

Additional Bankruptcy Information

• Consumer Bankruptcy Information: Overview of consumer bankruptcy protection.
• Consumer Bankruptcy FAQ: Questions and answers about consumer bankruptcy procedures and other bankruptcy solutions.
• Chapter 7 Bankruptcy: Overview of Chapter 7 bankruptcy protection.
• Chapter 7 Bankruptcy FAQ: Questions and answers about filing for Chapter 7 bankruptcy protection.
• Chapter 13 Bankruptcy: Overview of Chapter 13 bankruptcy protection.
• Chapter 13 Bankruptcy FAQ: Questions and answers about filing for Chapter 13 bankruptcy protection.

Free Consultation

Call us at (303) 781-1533 to setup a confidential, free consultation.

Our Bankruptcy Law Office is open Monday through Friday, from 9:00am until 5:30pm, with evenings and weekends by appointment.

Thank you for visiting Parkes Law Group!

Denver, Colorado