Chapter 7 Debt Relief

San Diego Bankruptcy Lawyer

Chapter 7 bankruptcy filing is the most commonly utilized bankruptcy chapter in San Diego. They are so popular in San Diego because they immediately STOP:

  • Wage Garnishment
  • Credit Card Harassment
  • Tax Liens
  • Medical Bills
  • Judgements and Lawsuits
  • And More

Your San Diego bankruptcy lawyer can decide if Chapter 7 Liquidation is right for you.

The term “liquidation” is not defined in the Bankruptcy Code but refers to a Chapter 7 bankruptcy that provides debt relief by the administration, collection, and sale of a debtor’s assets by a bankruptcy trustee and the distribution of the proceeds, after payment of administrative expenses, to pay creditors. Chapter 7 of Title 11 of the bankruptcy law is entitled “Liquidation.” The term is also used in connection with the fixing of debt relief claims. Only a small number of Chapter 7 bankruptcy cases filed are actually asset cases. In most bankruptcy cases, the assets of a debtor are exempt and not liquidated to pay creditors. Liquidation can also take plan pursuant to a Chapter 11 plan.

One of the most dramatic changes brought to bankruptcy practice with the 2005 Amendments is the “means test” to determine whether a Chapter 7 bankruptcy petition is an abuse and should be either dismissed or converted to a Chapter 11 or 13, each requiring debt relief repayment plans. The bankruptcy means test was designed to prevent potential San Diego debtors with net income over a specified level from utilizing Chapter 7 bankruptcy. The method of employing the means test is under the “abuse” provisions of Bankruptcy Code. Bankruptcy lawyers will tell you that Debtors must either convert the debt relief case to a Chapter 13 or Chapter 11 repayment plan, or suffer dismissal of the case if the net income shown on the petition is above a specified level. The net income level utilized in Code was originally created by, and for, the IRS to determine its own repayment plans.  Previously, there was no limit to the income a San Diego Chapter 7 debtor could have, and there was no duty to contribute personal service income toward a repayment plan. The U.S. Trustee is charged with the duty to oversee the requirement by reviewing each Chapter 7 bankruptcy petition, and reporting to the creditors whether a motion to dismiss is appropriate.  The Trustee and your bankruptcy lawyer work closely to administer your debt relief case.

The experienced San Diego Bankruptcy Lawyers at Thompson | Wedeking can start your debt relief filing today.  For over 35 years we have been providing San Diego and Southern California with the financial peace of mind that a fresh start can bring.  Don’t let your debts get out of control.  Contact us TODAY for a free case evaluation.

To protect against spam, please enter the letters below