In Yuba City, CA is the Approval of My Chapter 7 Bankruptcy Case Automatic?

Residents looking for a Yuba City Bankruptcy Attorney sometimes question: Is the approval of my Chapter 7 bankruptcy case automatic?

The Chapter 7 Bankruptcy Process Explained

The Chapter 7 bankruptcy process is commonly referred to as a ‘liquidation bankruptcy.’ This type of bankruptcy involves the potential sale of a debtor’s nonexempt assets by the trustee who could then use the proceeds to pay off the creditors.

What Does Bankruptcy Approval Mean?

Often, when people refer to the ‘approval’ of a bankruptcy case, they mean obtaining a discharge order from the bankruptcy court. A discharge order legally wipes out certain debts and prevents creditors from taking collection actions against you for those debts.

Is Approval of Chapter 7 Bankruptcy Automatic?

The direct answer is no, not all Chapter 7 bankruptcy filings are automatically approved. There are several steps and great attention to detail is required to get a successful discharge. Contrary to the notion of automatic approval, filers must pass the ‘Means Test.’ Failure to qualify under this test could lead to a dismissal of your case or a conversion to Chapter 13 bankruptcy.

The Means Test

A Chapter 7 bankruptcy filer must pass the Means Test. This test involves the calculation of your income and expenses to determine if you’re genuinely unable to pay your debts. Those with too high an income might not be eligible.

Credit Counseling and Debtor Education

Before filing for Chapter 7 bankruptcy, you must complete a credit counseling course. After filing, a debtor education course must be completed. If you fail to complete these courses, the court won’t discharge your debts.

Furnishing Accurate Information

A Chapter 7 bankruptcy filer must provide complete and accurate financial and property information. Any attempt to hide assets or provide deceitful information can lead to case dismissal.

Securities of the Filers

Filing for bankruptcy also means accepting the consequences. Some possessions may be seized and sold to help repay your creditors. However, bankruptcy law also provides a set of exemptions that shield some property from liquidation.

Conclusion

While not all discharges in Chapter 7 bankruptcy are automatic, strategizing with a knowledgeable attorney such as the Yuba City Bankruptcy Attorney can help you navigate the process and increase your chances of success.