“Courage is not the absence of fear,
but rather the judgment that something
else is more important than fear..”
- Ambrose Redmoon
Deciding to seek counsel for my debt problems was a hard decision for me to come to terms with, and I did feel a certain degree of shame because I was not able to “handle” my debt on my own. The moment I stepped into Blake Goodman’s office I was immediately put at ease by all of the friendly staff, as well as Mr. Goodman himself. Mr. Goodman explained everything to me in down-to-earth, layman’s terms and completely put me at ease with regards to the decision I was making. -Ryann Gomes, Honolulu
Before hiring the services of Atty Goodman, I scouted for other legal services to handle my case. After getting satisfactory legal opinion from Atty Goodman, I decided to hire him to represent me. I am happy to say that I didn’t make the mistake of selecting Atty Goodman, because the case was handled extremely well. -Jose Guevarra, Guam
Chapter 7. A Chapter 7 bankruptcy permits the debtor to liquidate assets in an orderly way. In Chapter 7 (also known as "straight" bankruptcy), a trustee is appointed. The trustee collects all nonexempt assets of the debtor, sells those assets, and distributes the proceeds to creditors. There is no minimum or maximum debt limitation for Chapter 7, and the debtor doesn't have to be insolvent. The goal of an individual debtor in a Chapter 7 case is to get a "discharge" of his or her debts.
Automatic stay. The automatic stay is a feature of bankruptcy law that goes into effect immediately upon filing a bankruptcy petition. The automatic stay forces creditors to stop all collection actions (like foreclosures, repossessions, garnishments, and evictions) against the debtor, so that collection and distribution of assets can occur according to a fair and orderly method as specified in the Bankruptcy Code, rather than according to which creditors might be the quickest or most aggressive or have an "in" with the debtor.
Exemptions. Individual debtors are entitled to keep certain assets free from the claims of creditors, under federal or state exemption laws. Typical exemptions are the homestead exemption (equity in the debtor's personal residence), cash value of insurance policies, household goods and furnishings, clothing, wages, and tools used in the debtor's job. The amount of the exemption depends on whether federal or state exemptions are available and/or used.
Certain types of property are exempt, however, which means that the debtor can keep them. Exempt property can include:
* The equity in you home up to about $18,000 per person filing.
* Motor vehicles, up to a certain value;
* Reasonably necessary clothing;
* Reasonably necessary household goods and furnishings;
* Household appliances; Jewelry, up to a certain value;
* Pensions; A portion of the equity in the debtor's home;
* Tools of the debtor's trade or profession, up to a certain value;
* A portion of unpaid but earned wages;
* Public benefits, including public assistance (welfare), Social Security
Discharge. Generally, a discharge in bankruptcy means that a debtor's obligations are erased or wiped out. When a discharge is granted, it protects the debtor from personal liability on the discharged debt. A discharge is only available to certain debtors and for certain debts, however. For example, debtors that are not individuals cannot receive a discharge in a Chapter 7 bankruptcy. :: back to top
BENEFITS:
With Chapter 7 Bankruptcy You Get a Fresh Start in a Matter of Months
The U.S. Constitution abolished Debtor’s prisons in favor of a more workable solution. Instead of going to jail you are discharged (or excused) from the majority of types of debts. Congress enacted Chapter 7 Bankruptcy as part of the U.S. Bankruptcy Laws in order to prevent increasing the ranks of the homeless, wageless, divorced, and depressed. Chapter 7 acts to give you a fresh financial start and 95% of the cases are finished in about four months.
With Chapter 7 Bankruptcy You Will Be Able to Keep What You Need to Start Over
You’ll be able to keep what you need to make a new start in life. Property you have may be exempt, meaning creditors can’t take it, such as your house (if below a certain equity), furniture, clothes, tools of trade, cars, and jewelry. Not all property is exempt, but in most cases there exists a generous wildcard or miscellaneous exemption which will help shield a large majority of the average person or family’s property in full. We can advise you of ways to keep the things you need.
You Will Be Allowed To Continue Paying Any Secured Debts A secured debt is one where your creditor has a lien or security interest in something you own. For instance, if you’re paying off your car or house, these creditors have a security interest in the house or car. In most cases you will be able to continue paying on the secured debts, without losing them. Conversely, you will be given the opportunity, if you so desire, to return these assets back to the creditor and erase all responsibilities for continuing to pay these debts.
In Chapter 7 Bankruptcy You Can Continue to Pay Any Debts That You’ve Discharged, But Want to Keep Paying
The law encourages you to keep paying any obligations that you desire to pay. Your creditors will love you for it; they just can’t legally force you to keep paying.
Creditors Are Prohibited From Collecting Discharged Debts - Forever If a creditor attempts to collect a discharged debt from you after your Chapter 7 Bankruptcy is over, they risk being held in contempt of Court. Furthermore, you may be able to sue that creditor for damages.
Chapter 7 Bankruptcy Will Excuse Most of Your Debts
While the vast majority of the average person’s debts are forgiven in Chapter 7, some debts will remain. Most typically: recent (last 3 years) Federal and State tax debts, alimony, child support, student loans, and debts entered into under the pretense of fraud, embezzlement, and intentional injury. This list is somewhat simplified, so make sure a qualified Hawaii bankruptcy attorney can evaluate the factors in maximizing your rights.
Minimal Appearances In Court In Chapter 7 Bankruptcy, as well as Chapter 13 Bankruptcy, there’s only one mandatory appearance in front of your assigned trustee. It’s a quick hearing and not in front of a judge, jury, nor is it even in a courtroom. The meeting will typically last five to ten minutes.
No One Will Be Able to Discriminate Against You in the Workplace It’s illegal for private or government employers to discriminate against you just because you filed for Chapter 7 or Chapter 13 bankruptcy. As well, no governmental agency can refuse to grant you a driver’s license, a permit, a student loan, or similar governmental grant. :: back to top COMMONLY ASKED QUESTIONS ABOUT CHAPTER 7:
What is a fraudulent transfer, and how could I have committed one accidentally before filing under Chapter 7?
A fraudulent transfer is a transfer made by a debtor with the intent or effect of reducing the assets available to creditors. For instance a debtor might attempt to repay a loan to a friend or family member when those funds ought rightfully to be divided between all the debtor's creditors. Fraudulent transfer law exists both in and outside of bankruptcy. A trustee has the power to undo or nullify ("avoid") transfers of the debtor made with actual intent to hinder, delay, or defraud creditors, and certain transfers for which the debtor did not receive a reasonably equivalent value in exchange for the transfer.
Will a debtor lose his or her home by filing Chapter 7 bankruptcy?
If the debtor in a Chapter 7 liquidation bankruptcy is behind on his or her mortgage payments, the home could be lost. The mortgage lender in such cases usually asks the bankruptcy court to lift the automatic stay so that it can institute foreclosure proceedings, in which case the home will be sold and the proceeds used to pay off the debt. Whether a debtor who is not behind on mortgage payments will lose his or her house depends on how much equity the debtor has in the property and the amount of the state homestead exemption.
Will a debtor lose his or her home by filing Chapter 7 bankruptcy?
If the debtor in a Chapter 7 liquidation bankruptcy is behind on his or her mortgage payments, the home could be lost. The mortgage lender in such cases usually asks the bankruptcy court to lift the automatic stay so that it can institute foreclosure proceedings, in which case the home will be sold and the proceeds used to pay off the debt. Whether a debtor who is not behind on mortgage payments will lose his or her house depends on how much equity the debtor has in the property and the amount of the state homestead exemption.
What does the Chapter 7 trustee do as it relates to my case?
Actually there are several types of bankruptcy trustees:
The United States Trustee is responsible for oversight of the bankruptcy process as a whole. The United States Trustee's duties are to maintain and supervise a panel of private trustees (usually, but not always, private attorneys) to serve in Chapter 7 cases. The United States Trustee appoints the trustee from a panel of private trustees.
A Chapter 7 Trustee is responsible for representing the interests of the debtor's estate and creditors as a whole. You will meet the Chapter 7 Trustee appointed to your case at the creditor’s meeting, the one simple, but mandatory hearing that you must attend with your attorney.
Can I discharge my student loans in Chapter 7?
Student loans are no longer dischargeable in any chapter of bankruptcy unless you can prove that repaying the loan creates an undue hardship on you or your family. Prior law allowed their discharge once they had been in pay status for 7 years. The law changed in the fall of 1998.
In my experience, if you can walk and talk, you are probably going to have to pay back your student loans. Proving hardship usually requires showing that you can't provide a minimum standard of living for yourself and your dependents if you have to repay the loan. A Chapter 7 filing should have no effect on such collections.
How will filing under Chapter 7 impact my credit report?
While your credit score will be Damaged for 10 years, in most cases you’ll bounce back quicker than you think.
Having a bankruptcy on your credit report doesn’t mean you can’t get credit, it merely means you’ll have to overcome the poor credit ranking by paying higher interest, larger down payments, or discussing your circumstances for filing bankruptcy with your credit grantor. If you’ve had to file because of an illness or injury, many credit rating agencies will take that into account, and as well, some lenders welcome business from people who have recently filed a Chapter 7 Bankruptcy because it will be eight more years before a person can file under Chapter 7 again. Depending on various factors regarding your income and income stability, the vast majority of my clients will be able to obtain financing to obtain a vehicle loan immediately after their case is finished. And the mortgage lending industry will tell you that two years after your case is over you will usually qualify for conventional house loan. (Don’t take it from us, call any mortgage broker and they’ll convey the same answer.)
Way before the ten year period expires most of my clients are able to obtain a credit cards or unsecured bank loans. This is just the reality of aggressive lending policies that creditors practice today.
Usually the cost of obtaining credit with less than a squeaky clean credit profile results in the payment of higher interest rates on your borrowing. But you must ask yourself- what is the cost of not declaring bankruptcy, both economically and emotionally?
Most other credit information can be included in a consumer credit report for seven years. Civil suits, civil judgments, and arrest records, however, can be reported for at least seven years, and longer if the information is relevant for a longer time period. For example, if the civil judgment against the debtor is valid for ten years, it can be reported for credit-rating purposes for the same time period.
DISCLAIMER: This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.
