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Chapter 7 Bankruptcy: Frequently Asked Questions

The following responses are intended as general information and should not be taken as legal advice. Your case has unique factors that will require a personalized, qualified evaluation. Please do not hesitate to contact us with additional questions and concerns.

At Consumer Law Pro, we have handled more than 2,000 bankruptcy cases. We have the skills and experiences needed to obtain the best possible resolution for your case. Call (303) 622-3833 or contact us online to get started today.

  • Q:What is Chapter 7 bankruptcy?

    A:Chapter 7 bankruptcy is the most common form of bankruptcy filed by consumer debtors, and the entire process generally takes about 4-6 months. Unlike Chapter 13, Chapter 7 does not require filers to pay their debts through a court-approved repayment plan. Instead, the debtor will receive a discharge (forgiveness) of eligible debts once the trustee liquidates their non-exempt assets. In most of the cases we handle, clients lose little to no property.

  • Q:What does a Chapter 7 discharge do?

    A:A discharge is a federal court order that legally prevents creditors from attempting to collect specified debt. Not all debts are dischargeable, however. If you owe tax debt, federal student loans, child support, or alimony, you will likely not be free of these obligations after bankruptcy. Generally, Chapter 7 bankruptcy can discharge medical bills, credit card debt, personal loans, payday loans, back-rent, auto loan deficiency balances, and more.

  • Q:How do I obtain a Chapter 7 discharge?

    A:First, you must be eligible to file Chapter 7 bankruptcy. Certain income requirements apply, depending on your household size and location. You also may not qualify if you filed bankruptcy in recent years. Once eligibility has been established, you must file a bankruptcy petition, schedules, and other related documents with the Bankruptcy Court. You also must take a credit counseling course and attend a meeting of creditors, as well as comply with any instructions from the Chapter 7 trustee assigned to the case.

  • Q:What is the bankruptcy means test?

    A:The means test is a form filed in every case that determines whether the debtor’s income exceeds a certain threshold for their household size and location. If the debtor’s income is higher than the median income, they may still qualify, depending on the amount of their disposable income as determined by the form. The expenses used on the form to determine disposable income are not the debtor’s actual expenses but rather are taken from the IRS local standards. The only expenses that are based on the debtor’s actual expenses are for secured debt payments, child support, health care, and most payroll deductions. The means test is not a straightforward form to complete. Most pro se debtors (i.e. those who represent themselves) learn this only after their case is filed and dismissed. The form has many limitations that are not immediately discernible from the form itself. Only by staying up to date with current case law is an attorney able to properly complete the form. As such, we urge you not to rely on online means test forms. You cannot substitute the advice of qualified counsel to complete the Chapter 7 means test form.

  • Q:Are there other factors that would prevent a discharge?

    A:Aside from the income requirements under the means test, you may not be eligible to complete a Chapter 7 case if: You filed a Chapter 7 in the last 8 years and received a discharge, or you filed a Chapter 13 in the last 6 years (with certain exceptions); you defraud your creditors in your Chapter 7 case by concealing or transferring valuable non-exempt assets; you made false claims regarding your financial condition in order to obtain credit; you falsify or conceal financial records and/or business agreements; you mislead the bankruptcy trustee regarding your financial situation and/or withhold information from the trustee; you fail to explain a significant loss of property (e.g. liquidating significant nonexempt assets before you file bankruptcy and failing to explain what you did with the proceeds); you fail to attend the meeting of creditors or fail to answer questions during the meeting; you fail to take a course in personal financial management within 45 days of the meeting of creditors; you were convicted of bankruptcy fraud in the past. This is not a comprehensive list. Other exemptions to eligibility may apply. Seek legal counsel if you have questions about your eligibility.

  • Q:Which debts are not discharged?

    A:All of your debts are eligible for a Chapter 7 discharge except for the following: 

  • Q:Where should I file if I recently moved?

    A:File through the Bankruptcy Court of the state where you lived for the greater of the last 180 days. For example, if you have lived in Colorado for 91 days out of the last 180 days, you would file in the U.S. Bankruptcy Court for the State of Colorado. Otherwise, you must wait until the 91 days have passed, or, if you cannot wait, you must file in your former state of residence.

  • Q:Can I file for bankruptcy without my spouse?

    A:Yes. You are not responsible for your spouse’s debts, whether they incurred them before or after you were married. If one spouse has maintained a low debt-to-income ratio, that spouse should not file bankruptcy. Just keep in mind that the non-filing spouse’s income may still count against your eligibility to qualify for a Chapter 7 bankruptcy. There are also good reasons to file bankruptcy with your spouse if you are both struggling with debt. These reasons include: saving money on legal and filing fees; attending only one meeting of creditors; dealing with the same attorney; filing just one petition; every case is unique, however, and we urge you to retain qualified counsel before deciding either way.

  • Q:Are there reasons to delay filing?

    A:There may be reasons to delay. If you have ongoing medical expenses from an injury or illness, you should wait until all anticipated costs have been billed. If you anticipate receiving an inheritance in the near future, you should seek legal counsel on how to proceed. If you are waiting on a tax refund or you have a significant amount of money coming your way, you will need to turn over that money to the trustee unless you spent it before you filed. Always seek the advice of a qualified attorney when it comes to disposal of assets or spending large quantities of money before filing bankruptcy. This type of conduct could have negative implications on your bankruptcy case.

  • Q:When is it advisable to file bankruptcy as soon as possible?

    A:There may be reasons to file quickly. One major reason is to save a home from foreclosure with a pending sale date. Additionally, if a creditor has a judgment against you, the next step is likely a wage garnishment or bank account levy. Many individuals wait until the garnishment goes into effect to seek bankruptcy protection. By then, it may be too late, because the garnishment takes income that could have funded the bankruptcy legal costs.

  • Q:Do judgments go away when I file for Chapter 7 bankruptcy?

    A:Filing bankruptcy prevents creditors who have received a judgment from collecting on the judgment. Filing bankruptcy does not make the judgment disappear from your public records. The fact that a creditor received a judgment against you will remain on your credit. If you own a home and have a judgment on your record, you should seek legal counsel regarding removing the judgment lien against your home after filing bankruptcy.

  • Q:How will filing for Chapter 7 bankruptcy affect my credit?

    A:If you have good credit, your credit score will drop substantially. However, if you already have bad credit, it will go up shortly after filing. Because filing bankruptcy reduces your debt-to-income ratio, your credit score will eventually go up, depending on how you manage it after filing. The most significant effects bankruptcy will have on your credit score will last for approximately 2 years. It is not unreasonable to anticipate a credit score in the high 600s after 2 years of getting a bankruptcy discharge. The credit score is just one of many factors a creditor will weigh when determining whether to lend you credit. Some creditors may not grant credit for several years after the bankruptcy discharge, even if the individual has a good credit score. Chapter 7 bankruptcy will remain on a person’s credit report for 10 years.

  • Q:Will my friends, family, or employer find out that I've filed?

    A:It is not likely, unless they search your public records on PACER, which most people will not have reason to do. It is rare for a trustee to contact your employer.

  • Q:Will potential employers discriminate against me for filing bankruptcy?

    A:It is unlawful for an employer and government agency to make any eligibility determinations based on the fact that you filed bankruptcy.

  • Q:Can I expect to lose property in a Chapter 7 bankruptcy?

    A:It is rare for a person to turn over significant property because most individuals who file Chapter 7 have nothing left except their exempt assets. Those who stand to lose assets are generally better suited to Chapter 13. Your bankruptcy attorney will go over your asset schedules and advise you on what to expect.

  • Q:Which property can I keep?

    A:In most cases, Chapter 7 filers keep the vast majority of their property. The laws of your state (not bankruptcy law) determine which property is exempted. In Colorado, for example, your belongings are protected up to a certain value. Some property is not entitled to any protection, such as recreational vehicles and expensive sport’s equipment, firearms, stocks, and bonds. If you have significant valuable assets (e.g. expensive art), you may not want to file bankruptcy. See Colorado Revised Statute section 13-54-102 for a complete list of exempt property in Colorado.

  • Q:Is there a court meeting?

    A:You do not have to appear before a judge except in very rare cases. You will be warned well in advance of that. In a Chapter 7 case, the only appearance you can expect to make is the 341(a) meeting of creditors. This meeting is conducted by the trustee, who is appointed not as a judge but as an administer of the case. They will ask you questions and collect percentages of any assets liquidated during your case. It is rare for creditors to appear for these meetings.

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