Chapter 7 FAQs

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.  Most people are eligible to file for Chapter 7. If your household income is below the state median amount, you automatically qualify to file Chapter 7.  Otherwise, a means test is used to determine whether you have disposable income.

Q.  What is a "no-asset" bankruptcy?

A.  Since Chapter 7 allows you to exempt several types of assets from sale, it is possible 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 The vast majority of bankruptcies are no-asset bankruptcies.

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.   While you may not file for bankruptcy within eight years of filing a previous Chapter 7, you may be eligible to file for a Chapter 13 if more than four years has elapsed since you filed Chapter 7 and received a discharge. 

Q.  Will I be able to keep my home?

A. The law allows you to exempt a certain amount of equity in your home. Currently, an individual can exempt $75,000 of equity, and a couple can exempt $100,000 of equity in their home. Additionally, a disabled debtor or a debtor over the age of 75 can exempt $175,000 of equity.