Bankruptcy Basics – Chapter 7

Las Vegas, NVBankruptcy under Chapter 7 is often referred to as “straight bankruptcy.” Chapter 7 cases may be filed by individuals, married couples, a married person filing a individual case, or a business entity.

Filing for Chapter 7 Bankruptcy

Upon filing the case, all collection activity against the debtor, the person filing for Bankruptcy, must stop. Therefore, the debtor is given relief from harassing collection phone calls, lawsuits and wage garnishments. While vehicle repossession and foreclosure will be temporarily, a creditor will usually request relief from the Bankruptcy Stay to retake collateral in a Chapter 7 Bankruptcy. (More permanent resolution of vehicle and home repossessions may be better handled in a Chapter 13 Bankruptcy.)

Most debt can be eliminated in Chapter 7, such as credit card, payday loans, deficiency balances from foreclosures and/or automobile repossession. Certain debts can not be eliminated, such as recent income tax, spousal and child support, student loans.

The debtor usually protects most of his property. Subject to certain qualifications and value limitations, a debtor whom is eligible to elect Nevada Exemption law may be able to protect a homestead, automobile, household furnishings, clothing, tax retirement account and $1,000.00 on any property of his choice. (see NRS 21.090).

One of the main requirements to be eligible for Chapter 7 Bankruptcy is based on the debtor’s income. If the debtor’s average gross monthly income, based on the six months prior to filing for Bankruptcy, is less than the median income for the State of Nevada, based on family size, then the debtor passes one of the main income tests. If the debtor’s income is greater than the median income, then the debtor’s income and expenses must be analyzed under the Means Test. How much, if any, income that is left over after deducting allowed expenses, will determine eligibility.

Finding a Qualified Legal Attorney

The debtor is required to attend the Meeting of Creditors. At the meeting, a Bankruptcy Trustee will examine the debtor under oath about the Bankruptcy Petition, Schedules and Statements filed in the case. The Bankruptcy Trustee’s main role is to liquidate non-exempt assets to pay creditors.

The debtors is also required to complete a Credit Counseling course prior to filing for Bankruptcy and complete a Financial Management course to complete the requirements for a Bankruptcy Discharge. Upon discharge, the debtor emerges from Bankruptcy.

While this is the basic outline of the Chapter 7 Bankruptcy case, every person’s situation is different and should handled by a competent Bankruptcy Attorney.

If you are in the Las Vegas/Henderson area and are considering a Chapter 7 Bankruptcy, please call the Law Office of Rodney K. Okano for information.

Phone: (702) 566-3600