Chapter 7 Bankruptcy Attorney in Ventura, California

Many people, when hearing the word “bankruptcy,” shudder and think it means loss of everything and the end to ever having credit again. But if they think that, they’re wrong on both fronts. Not only does bankruptcy allow you to keep many (if not all) of your possessions, it also opens up a new financial horizon, offering you a fresh start in life. 

If debt is overwhelming you in or around Ventura, California, contact us at the Kenneth H.J. Henjum Law Office. We will review your financial situation with you and advise you of your best options going forward, including a Chapter 7 filing that will free up your future in a matter of months. We will also help you prepare the filing requirements and then walk with you side by side through the process. 

Our office proudly serves clients throughout Ventura County, including Thousand Oaks, Simi Valley, Camarillo, and Oxnard, as well as Carpinteria, Santa Barbara, Lompoc, Santa Maria, and Paso Robles. 

Bankruptcy Overview

Bankruptcy is governed by federal legislation, so how it is administered in every state is pretty uniform. An individual or a couple who are being overwhelmed by debt obligations that they cannot meet can turn to a bankruptcy filing to get their financial house in order. The two most popular types of bankruptcy available include Chapter 13 and Chapter 7:  

• One is a reorganization plan called Chapter 13. Under this option, the filing party must use disposable income – what’s left after paying for the essentials of life – to pay back creditors as best they can, which generally means a reduction in what’s owed. However, this plan takes three to five years before bankruptcy can be concluded and all debts discharged. 

• The other option, called Chapter 7, is over in a matter of months, and it is by far the most used of the options for personal filings. Chapter 7 is known as the liquidation plan because it allows the bankruptcy trustee assigned to the case to sell off assets to repay creditors. Here is where exemptions come into focus. A homestead exemption often allows you to retain your residence, and other exemptions for your vehicle and personal belongings often shield them as well. 

Whichever bankruptcy option you choose, our bankruptcy attorney is here for you. Reach out to our office today to schedule a meeting with us.  

What Is Chapter 7?

Chapter 7 is one of the two main options under the federal bankruptcy code for individuals and families to obtain a fresh financial start through the discharge of unsecured debts. It is known as the liquidation plan because the bankruptcy trustee does indeed have the power to sell off assets to help pay debt obligations. 

Chapter 7 bankruptcy is a legal process in the United States that allows individuals and businesses to eliminate most of their debts when they are unable to pay them back. Here's a simple explanation: 

• Liquidation: In this type of bankruptcy, a court-appointed trustee sells your non-exempt property to pay off your debts. Non-exempt property usually includes luxury items and assets that aren't considered necessary. 

• Debt Discharge: Once the liquidation is done, your remaining eligible debts are typically wiped out. This means you no longer owe money on those debts, like credit card balances and medical bills. 

• Exemptions: You can often keep some of your essential property, like your primary residence and basic personal belongings, through exemptions. These vary by state. 

• Not for Everyone: Not everyone can file for Chapter 7. Your income, expenses, and other factors determine if you qualify. If you make too much money, you might have to consider Chapter 13 bankruptcy instead. 

• Legal Process: To file for Chapter 7, you must go through a legal process, including a means test to determine if you're eligible and meeting other requirements. 

The first step in the process of filing under Chapter 7 is to pass an income means test. This test involves calculating all your income over the six months prior to your filing, dividing that figure by six, and coming up with a monthly income level. The sum can change based on inflation, but currently, if you make $7,475 a month or less, you qualify. If you make more than $12,475, you don’t qualify.

For sums in between, there are further calculations to see if you qualify. 

What Does Liquidation Mean?

Liquidation is the process of converting assets, whether they are physical possessions, investments, or other property, into cash or a more easily tradable form. This is typically done to settle debts or distribute assets among stakeholders when a business or individual cannot meet their financial obligations. 

• Converting Assets to Cash: In a liquidation process, assets like real estate, equipment, inventory, or investments are sold or otherwise transformed into cash. 

• Debt Repayment or Distribution: The cash generated from liquidation is then used to pay off debts or distribute the proceeds among creditors or stakeholders. In the context of bankruptcy, it helps repay creditors to the extent possible. 

• Closure of Business: In the case of a business, liquidation often signifies the end of its operations. The company's assets are sold off, and any remaining funds are distributed according to a predefined hierarchy, typically starting with secured creditors. 

• Bankruptcy: Liquidation can be a significant component of a Chapter 7 bankruptcy, where non-exempt assets are sold to pay off debts, and the remaining eligible debts are discharged. 

• Asset Valuation: During the liquidation process, an assessment is made to determine the value of the assets to ensure they are sold at fair market prices. 

The bankruptcy trustee will determine if your assets fall under California’s list of exemptions. If the equity in your home or automobile falls under the state’s exemptions, then your assets are safe and you get to retain them. 

Exemptions

California actually has two sets of exemptions. One, called 703 exemptions, is basically for those who do not own a home, while 704 exemptions allow for a more robust homestead exemption. The 704 homestead exemption protects your primary residence or other real property from liquidation if your equity is $600,000 or less. The equity exemption is based on real estate market values in the county in which you live. The 703 option differs in that it has a wildcard exemption. Both sets of exemptions are good through April 1, 2025. 

When Is Chapter 7 a Good Option?

Most filers opt for Chapter 7 because it is quick and over and done within a few months, while exemptions allow the retention of most if not all assets. Chapter 13, in contrast, takes at least three years and as many as five years to complete, during which time you have to make monthly payments to a trustee. Chapter 13 is primarily for those who don’t qualify under Chapter 7 or whose equity exceeds available exemptions.