Getting ready to file for bankruptcy in Carlsbad, CA is a big step, especially if you’re filing for Chapter 7. Working with an attorney can help you mitigate some of the harder parts, like selling non-exempt assets to pay your creditors, but it’s still a frustrating and sad process for most people.

The idea behind bankruptcy is to provide a fresh start for debtors who are unable to pay their creditors. However, it’s not a free pass to rack up more debt—you’ll need to make sacrifices in order to get out from under your debt. For example, it will remain on your credit score for a certain period of time, and require you to give up some of your assets.

Read on to learn about what happens in Chapter 7 bankruptcy in Carlsbad, CA.

Filing for Chapter 7 bankruptcy

Chapter 7 bankruptcy is a specific type of bankruptcy proceeding for those who are truly unable to pay their debts. First, the person filing needs to pass the means test, which demonstrates that due to their income, they are unable to pay off their debts. Alternatively, they can show that they’re below the median income for their state and household size—for example, the median Californian single person’s income is about $74,000.

After a debtor files, a bankruptcy trustee is appointed by the court. The court will issue an automatic stay, preventing your creditors from harassing you during (and, if the debts are discharged, after) the proceedings. You also will not have to make payments on the applicable debts, although you will be liable for anything incurred after you file.

In Chapter 7 bankruptcy, your non-exempt assets are sold off and the proceeds go toward paying off your creditors. Depending on whether you’re married, you may be able to double the amount of exempt property, such as your home, vehicles, jewelry, tools of your trade, retirement accounts and more. Working with a bankruptcy attorney can help you maximize the number of exemptions you’re allowed to take.

Keep in mind that creditors can pursue any secured loans you may have, like mortgages and cars. You may end up having your vehicle repossessed and your home foreclosed upon if your home or car doesn’t qualify as an exemption and you’re not making the regular monthly payments. This is unfortunately a risk that comes with filing for bankruptcy—but you will get a fresh start from most of your debts when the case is over.

Chapter 7 bankruptcy takes, from filing to discharge, about four to six months on average. Depending on how complicated your case is, however, you might see shorter or longer times.

The most important thing to remember is that you need to be transparent in all your dealings. An attorney can help explain why you must be forthcoming, but courts do not look kindly upon hiding assets.

For help with your Chapter 7 bankruptcy filing in Carlsbad, NM, get in touch with Gregory S. Hood, Attorney at Law, P.C.