Chapter 7 Bankruptcy Explained | Step by Step

caption are you dealing with an extremely major debt problem and considering personal bankruptcy in this video I'' m going to speak with you about Chapter seven insolvency and stroll you through it detailed as far as what you can expect however if this is your very first time here visiting my youtube channel proceed and click Subscribe every week I put out new videos that assist you deal with major debt issues alright let'' s talk about chapter 7 insolvency now when many people think of the insolvency procedure or going through bankruptcy it'' s basically chapter 7 that they'' re thinking about or at'least that ' s what they wish to file there are various chapters out there there'' s chapter 7 that we ' re gon na speak about today there'' s chapter 9 that a lot'of people sanctuary ' t heard about chapter 9 is really created for towns and cities and need to apply for personal bankruptcy there'' s chapter 11 which you may have become aware of that'' s normally booked for business and corporations that require to file for bankruptcy there'' s chapter 12 which is an actually odd one it ' s designed for farmers and commercial fishermen that tend to have a lot more debt than the normal person due to the kinds of loans that they need to get to operate their farms and then there'' s chapter 13 which is an individual restructuring so for many individuals they'' re either looking at chapter 7 or chapter 13 I'' m not gon na go into a great deal of information about what chapter 13 is today we ' re going to focus on the chapter 7 however in my next video we'' ll talk about 13 and white as you may desire to go that path ok chapter 7 the idea behind chapter 7 it is incredibly powerful and incredibly great at a couple things it'' s truly fantastic at eliminating unsecured financial obligations unsecured financial obligations are normally things like medical costs charge card individual loans generally any type of financial obligation that doesn'' t have any collateral or residential or commercial property connected to it so when someone enters my office and they'' re seeking to submit a chapter 7 personal bankruptcy the first thing we do is divide their debts into two groups we have unsecured financial obligations once again credit cards medical expenses personal loans those kinds of things and after that we have their secured debts where there'' s home connected to it like a mortgage automobile loan boat loan Recreational Vehicle loan anything that has property connected to it we put that in another category and the factor why we do that is since the court deals with unsecured financial obligations and guaranteed financial obligations quite differently in the chapter 7 insolvency process as I mentioned unsecured credit cards medical bills personal loans those usually are discharged suggesting they'' re gotten rid of in the disappear totally in the chapter 7 process protected debt like house loans and car loans are normally not discharged unless you choose you desire to give up the possession so in essence if you wish to keep your home let'' s state you have a home mortgage on your house and'you ' re thinking I desire to keep my house as I ' m going through this process however I wish to eliminate that charge card financial obligation you can keep your home normally as long as you continue to make the month-to-month payments on it if you'' re not making your monthly payments on it you'' re gon na lose the home there ' s no totally free house there ' s no totally free cars in bankruptcy I ' ve had people been available in thinking that they can do that they can file personal bankruptcy and they would erase the debt on their home and they would erase the financial obligation on their cars and truck and they would still be able to keep that it ' s not true if you wish to keep the cars and truck if you want to keep the house you got to continue to make the payment there'' s a couple other things that affect whether you can in fact keep the cars and truck and keep your house though and that is the amount of equity that you have in your home or your car now chapter 7 once again broad view concept is it'' s gon na get rid of all that unsecured debt the trade-off though is the courts going to want to see exist any properties that you have that can be liquidated or sold with the cash then offered to your financial institutions now most individuals'' s assets and the property they have actually are protected under various exemption laws each state has exemptions there'' s federal exemptions and these exemptions safeguard your home as you ' re going through the bankruptcy process but there'' s typically worths or dollar limits connected to each of those exemptions so for circumstances here in Arizona or I practice law the homestead exemption safeguards approximately one hundred and fifty thousand dollars of equity in your house so if you enter into a chapter 7 personal bankruptcy you can keep your house as long as you won keep making your monthly payments and 2 you put on'' t have more than one hundred and fifty thousand dollars of equity in your home if you do have more than one hundred fifty thousand dollars of equity in your house again this is the state of Arizona exemption each state'' s a little bit various some states are a lot various some states have extremely minimal homestead exemptions there'' s other locations that have a at homestead exemptions so but if you were in Arizona for example and you wanted to keep your house you'' re making your payment but you have more than $150,000 of equity you would not wish to submit chapter 7 due to the fact that the court could take your house sell it settle the first home mortgage offer you $150,000 to cover your homestead exemption and after that anything above that they would then disperse that to your financial institutions so most the time that'' s not a huge issue a lot of people put on ' t have like in Arizona put on'' t have more than $ 150,000 of equity in their house but it'' s something definitely we take a look at is if you'' re a risk of losing anything we ' ve got that more typically in automobiles where a car is paid off totally and the worth of it is more than the exemption for that state if that was the case then the court could sell the vehicle provide you your exemption quantity out of the profits and after that give the rest to your financial institutions so we would need to be able to look and ensure you'' re not going to lose anything if you'' re looking into Chapter 7 so let'' s return to where I started with this we have actually protected financial obligations and unsecured debts the unsecured debts are debts are usually going to disappear the guaranteed debts are not going to disappear and if you desire to keep it you got to continue to pay on it just have that be your basic rule if I want to keep my home if I desire to keep my vehicle I'' ve got to continue to make the regular monthly payments on those now it gets a little bit more complex due to the fact that then there'' s kind of subsets of each of these types of financial obligations too on with unsecured debts there are specific unsecured debts that wear'' t go away in insolvency in Chapter 7 personal bankruptcy'specifically that we ' re speaking about here there are particular financial obligations like taxes that are offered what ' s called priority status there are particular financial obligations like what are called domestic support obligations these are things like spousal support and child support those generally put on'' t disappear in a chapter 7 insolvency and many student loans do not go away in a chapter 7 insolvency so if you owe taxes domestic support obligations like child support or alimony or if you have trainee loan financial obligation you require to understand that by submitting chapter 7 personal bankruptcy those debts are most likely still going to be there when you come out on the rear end you'' re going to get rid of all the credit card financial obligation medical and the other things that are providing you sorrow but those other financial obligations are probably still going to exist there'' s certain exceptions to that which are we ' re not going to enter into in this brief YouTube video however just in general you require to be familiar with that if you owe taxes domestic assistance commitments or student loans those things most likely aren'' t going to disappear in your chapter 7 personal bankruptcy so the procedure itself is generally a lots of documents it today that I'' m recording this in 2020 it ' s anywhere from a 70 to a 90 page file with details on you that'' s submitted with the court there ' s details about your income about your properties about your debts about monetary deals that have actually taken place over the last couple of years essentially your entire financial world is going to be an open book when you file for chapter 7 it'' s crucial it ' s a vitally crucial that you divulge everything and you be honest in your files it is a criminal offense if you put on'' t do this if you don ' t think me you simply require to take a look at the current real Real Housewives the these different reality TV programs I was thinking about the like Miami housewives or whatever those shows are called that shows you how much I'' m seeing these things however often it seems like these reality contestants get caught up on you understand they make a lot of cash that buy a lot of things they get debt they file personal bankruptcy and they don'' t reveal things and these individuals wind up going to jail over it is a felony to stop working to disclose possessions in your personal bankruptcy put on'' t think you ' re gon na get away with it there have been countless individuals that have actually gone through the personal bankruptcy procedure before you did they know all the techniques they know how to find the possessions you will not get away with it be genuine with you ' ll have the ability to survive it simply fine however particularly you'understand you ' re working with a lawyer make certain you'' re revealing whatever there'' s nothing more scary as a bankruptcy lawyer than submitting a case and then having a customer pertained to me and say by the way I forgot to inform you about this make sure that you'' re extremely thorough in your disclosures in your case will normally go quite smooth for you so when all the information is assembled your cases then submitted with the court now among the other extremely effective things of a chapter 7 insolvency is as quickly as that case is filed with the personal bankruptcy court the judge in the event will release an order called the automated stay this stops all collections no telephone call no snotty letters no suits no garnishments no foreclosures nothing whatever stops as far as collections go and it is actually it'' s called the automatic stay it ' s literally automated as soon as I file these cases we discover electronically the court an email essentially gets kicked out offering with that order that can then be sent out to your lenders so if you'' re dealing with wage garnishment foreclosure just basic collections you know you'' re getting phone calls all that will stop as quickly as you submit your case and you get your lenders informed that they can no longer do those kinds of things so once all of that is created there it is submitted with the court there is one time you'' re going to have to go to the court and right now as I'' m recording this in 2020 the world seems to be sort of falling apart with Coppa 19 and everything else that'' s going on so whatever ' s being done over the phone however typically there'' s one time you need to go down to the court or to some other government constructing to consult with a personal bankruptcy trustee now the insolvency trustee is not your judge they wear'' t work for the court they in fact are subcontractors from the Department of Justice and what their task is to review your case make sure that everything'' s been finished effectively and they will seek to see if there'' s any assets that can be liquidated for the benefit of your financial institutions well there'' s one time when you'' re in fact to go fulfill with this trustee the meeting is really quick I constantly inform individuals you know people get actually stressed over it and I understand it'' s easy for me to state however they understand it ' s a really short conference they perform in Arizona they do like 4 to five of these every 30 minutes and what it is it'' s kept in a space'it ' s not kept in a courtroom however it'' s kept in just a meeting room you and your lawyer go up to the table they put you under oath and they'' re gon na ask you a handful of concerns about whether the details that you supplied to the court is precise to the very best of your understanding they'' re gon na ask you'if you ' ve lived in the state like of Arizona for the last couple of years and ask you if they have any specific concerns about your possessions and that'' s generally yet in some cases they ' ll be follow-up questions or the one additional documents and after that you can provide that with your lawyer at a later time now the that'' s called the meeting of the financial institutions sometime you ' ll hear it called the 341 meeting 341 is simply the code the Bankruptcy Code area that governs those conferences those are managed a bit in a different way in each state each trustees a little bit different so what I'' m telling you there is type of a simply a general description of what you can expect if you'' re going through that procedure but the conference itself is very short like we normally we need to drive a long method to downtown Phoenix find parking and then we go in and we'' re in there five minutes and we ' re out so it ' s a long drive for a brief meeting once that ' s over truly the only thing left for you to do in the majority of cases is complete a financial management class I ought to have stated prior to you can submit your case you need to complete a credit counseling course which is just a really it takes about an hour they'' re done online it ' s simply an informative course to provide you some information on financial matters this monetary management course which is done after your case is submitted exact same type of thing is done online it takes about an hour and a half and simply provides you some general info on how to deal with financial resources moving forward quickly after that then the case will be discharged now the discharge order is crucial since that'' s the order from your judge this states you are no longer legally bound on those financial obligations and from the day your case is filed until the discharge or discharge order is gone into takes about 4 to 5 months in a lot of chapter 7 cases there can be other things out there that complicate chapter 7 cases however in basic you'' re looking at about a 4 to five month period where the from the day that'' s filed till the discharge is in fact gotten in and those financial obligations are removed it then usually takes about two to three reporting cycles with the credit reporting company for it to show that the financial obligations are all zeroed out on your credit report I always inform clients wait about a month in some cases two to pull a credit report and ensure that all those financial obligations have been zeroed out and after that they'' re not you ' re disappointing as owing anything on those financial obligations any even more so that is sort of big picture thing of chapter 7 bankruptcy there are a great deal of other problems that can enter it so did just understand that there are long times there are things that can complicate it I can tell you one right out of the chute couple things I constantly talk to people about what I fulfill with them in an assessment is if you have actually transferred properties out of your name in the last two years it'' s crucial that you disclose that to your lawyer that indicates whether you'' ve offered a possession whether it'' s on you understand on the web or whether you'' ve sold something to somebody or if you'' ve even offered it away especially if you'' ve given it to a member of the family or a friend if you'' ve signed the title to your vehicle over to your brother or something like that you require to make certain to reveal that to your bankruptcy lawyer because that can cause an issue in a chapter 7 same thing chooses monies that are owed to a relative or a pal that you'' ve been actively repaying on for the in 2015 so for example if I borrow 10 thousand dollars from my brother and over the last year I'' ve been making month-to-month payments to attempt to get that paid back I need to make certain and disclose that to my bankruptcy attorney because that can also cause concerns in a chapter 7 personal bankruptcy where the insolvency trustee will actually return to your brother or your member of the family who ever tried to get those funds back so make sure that you divulge all of those kinds of deals those are a couple things which I'' ll go into a more information in a later video on those however those are some things that might cause problems in a chapter 7 and before I end this one big thing is not everyone gets approved for a chapter 7 personal bankruptcy you do have to fulfill a certain income and household size in the ways test to be able to submit a chapter 7 so these numbers are upgraded quarterly and they differ from state to state I'' m gon na provide you some numbers today here I'' m recording this in June of 2020 a person in Arizona they should make less than fifty two thousand 3 hundred and nineteen dollars or about 4 thousand 3 hundred sixty dollars monthly if they wish to receive a chapter 7 and it increases with the number of individuals that reside in your family so for circumstances the chart I have that I prepared in my consultations if you have up to eight individuals reside in your home you can make one hundred and twenty-two thousand 9 hundred fifty dollars a year or 10 thousand 2 hundred forty six dollars monthly has still get approved for a chapter seven little word of caution here even if your income may be over the limitations that I'' m speaking about here one your state may be various however 2 even if you'' re in Arizona where I practice and you make more than that you still may have the ability to certify since there are a great deal of various deductions we can make to get you below that in the ways test so that you still qualify so if you wear'' t qualify you can wind up in a chapter 13 case or not file insolvency like I said I'' m gon na do another video on chapter 13 and explain what that process resembles but that'' s usually what you ' re looking at for a chapter 7 it does stay on your credit for 10 years the majority of people recover a lot more rapidly than that credit cards vehicle loan they'' re offered practically right away for great or for bad just generally not extremely great rates of interest home mortgage usually 2 to 4 years like FHA will do mortgage 2 years after a chapter 7 are the lenders you'' re taking a look at three to 4 years so I never ever sugar-coated chapter 7 there'' s absolutely effects to it however I can tell you it'' s a very effective tool and in particular scenarios it is the best option for getting rid of financial obligation so in my workplace I use a totally free consultation where we can go over all your circumstance specifically for people who will live in the state of Arizona and let you know if Chapter seven would be a good alternative for you if you are discovering more about this procedure I do have on my channel here I do have a playlist that deals with personal bankruptcy specifically and can let you know more about what that procedure resembles and a few of these risks that I spoke about I go into some greater depth on there so once again thanks for enjoying today we'' ll speak to you soonAs found on YouTube – Creative Commons License

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