Chapter 7 bankruptcy is a debt liquidation process where individuals, corporations or other business entities who have overwhelming debt seek relief from creditor claims while retaining assets or property that are exempt from seizure. You do have to qualify for Chapter 7 relief and there are important deadlines that anyone who is thinking of filing needs to be aware that can either prevent you from filing or jeopardize your assets.
There are many complex issues in a Chapter 7, especially for debtors who have considerable assets or who may have misconceptions regarding bankruptcy. An attorney from the DCDM Law Group can explain bankruptcy law, and what various deadlines mean for your case. By having one of our attorneys represent you before you file, we can work with you so that these deadlines are met and you can retain most if not all of your assets while discharging certain debts.
Before You Can File (8 and 6 years)
- 8 year limit: You may not file under Chapter 7 if you filed a Chapter 7 within the past 8 years.
6 year limit: If you filed a Chapter 13 within the past 6 years, you may not file for Chapter 7 unless all unsecured claims were paid 100% of their claims, or at least 70% of the unsecured claims were paid and the debtor exhibited good faith and best efforts in trying to satisfy them off completely.
Residency Requirement (91 of 180 days)
Before you can file in a particular state, you must show that you have been a resident for at least 91 of the last 180 days before filing. Otherwise, you can only file in the state where you had been a resident, or where your principal place of business was located or where your principal assets have been located for most of the last 180 days. A DCDM Law Group attorney can determine this for you.
State of Domicile and Exemptions (2 years or 180 days)
States vary on whether only its exemptions may be used or if the debtor may elect to use the state’s or the federal exemptions. A debtor may want to file in another state that has more generous exemption amounts. Your state of domicile is determined by where you have lived for the past 2 years before filing unless you have not lived in a single state for 2 years. In this case, your exemptions are determined by your domicile in the 180 days preceding the last 2 years. If your state does not allow a non-resident to use its state’s exemptions, you must use the federal ones.
Credit Counseling Course (1 to 180 days)
Before you can file your petition, you must first take a trustee-approved credit counseling course. These can be completed easily and quickly within a day.
Filing of Essential Documents (5, 14 or 15 days)
The court will allow you to file your petition without including certain necessary documents but you only have a few days to provide them or the court will dismiss your petition. If so, you will have to wait 180 days before filing again. These filing deadlines include:
- Master mailing matrix—5 days
- Statement of Social Security Number—5 days
- Credit counseling certificate—5 days
- Schedules and Financial Statement—15 days or 45 days after order of dismissal
- Statement of current monthly income and means test—14 days
- Certificate of Debtor’s Receipt (14 days)
Within 14 days after filing the petition, the debtor must file a Certificate of Debtor’s Receipt of the Section 342(b) Notice, if the petition concerned primarily consumer debts. This Notice pertains to advising the debtor of the various bankruptcy chapters and the consequences that can result if the debtor falsifies any part of the petition.
Homestead Equity (40 months)
You cannot claim more than $125,000 in equity in your homestead as exempt if you purchased your home 3 years and 4 months before you file, unless it is a farm homestead. This is inapplicable if you had transferred equity from the sale of a previous homestead property within the same state.
Statement of Intention (30 days)
Within 30 days after filing or before the Creditor’s Meeting, whichever is earlier, the debtor must file a Statement of Intention regarding whether he/she will retain personal property that was secured by consumer debt. If keeping secured property, the debtor has to indicate whether he/she will reaffirm the debt or redeem the property by paying its market value and thus receive a discharge of that debt. The statement is first served on the trustee and creditors before it is filed or it can be done simultaneously.
Transfers, Concealment or Destruction of Property (2 and 10 years)
If the court finds that you transferred, sold, concealed or destroyed certain property with the intention of delaying, hindering or defrauding creditors within one year of filing, then it may prevent you from discharging any of your debt in a Chapter 7.
If the property was transferred to someone within 2 years of filing and the court determines it was for the purpose of delaying, hindering or defrauding a creditor, then the court may recover that property from the individual or entity to whom it was transferred or sold for less than its market value.
Further, if the court determines that property or assets that were transferred into a trust was done so to delay, hinder or defraud creditors, then the court can look back 10 years from the date of filing to ascertain this. If the trustee determines this, then those trust assets are recoverable as well.
Payments to a Relative or Insider-Preferences (1 years and 90 days)
Preferences are voidable by the trustee. These are payments of at least $600 made to a creditor for primarily consumer debts, or at least $5000 if primarily for non-consumer debt, that are made to a relative or business associate or insider within one year of filing. These payments may have to be paid by the recipient to the trustee who then distributes it to the various creditors.
Another type of preference are payments made to any other creditor within 90 days of filing unless made in the ordinary course of business or financial affairs of the debtor. This would allude to business debts or other routine payments that the debtor made as part of business operations or for maintenance of financial affairs.
Exceptions to Discharge-Non-Dischargeable Debts (70 or 90 days)
If you received a cash advance of at least $750 within 70 days of filing, or at least $500 received within 90 days of filing for luxury items or services unrelated for family support, these debts may be non-dischargeable. The trustee may require you to repay these before approving your discharge of all other debts.
Dismissal or Prior Bankruptcy (180 days)
If you filed a previous bankruptcy that the court dismissed because you failed to appear in court or to adhere to some other court order, or you voluntarily dismissed your petition in response to a motion by a creditor for relief from the automatic stay, you must wait 180 days before filing another Chapter 7 petition.
Consult the DCDM Law Group
These are the essential deadlines that most consumer debtors need to follow or to be cognizant of before filing since your petition may be dismissed or you will lose certain assets that otherwise could have been retained. Consult the Pasadena bankruptcy lawyers from the DCDM Law Group to advise you regarding your seeking bankruptcy petition.