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Can Creditors Keep Calling Me After I File a Chapter 7 Bankruptcy?

Upon filing a Chapter 7 bankruptcy, an automatic stay goes into effect. An automatic stay is when creditors can no longer continue attempts to collect your debts. Instead, any communications from a creditor must be made through your attorney.

Is It True That I Have To Qualify For A Chapter 7 Bankruptcy? What Does That Mean?

Certain limitations exist on who can be a debtor in a Chapter 7 case. Those limitations are commonly known as the “means test.” It is a calculation to determine

  • Whether the debt you have that you’re attempting to discharge is commercial or personal or consumer-related debt
  • Whether your income is above or below the median income for the area for a family of your size

If your debt is consumer-based and income is above the median level for your area, then you must run through the means test. Depending on the results, you may still qualify as a Chapter 7 debtor. But if you don’t, we would have to look at either a Chapter 13 or a Chapter 11 bankruptcy. However, bankruptcy will still be an option even if you don’t qualify as a Chapter 7 debtor.

Will All Of My Unsecured Debts Be Wiped Out In A Chapter 7 Bankruptcy?

Typically, your unsecured debts will be wiped out in a Chapter 7 Bankruptcy. These include

  • General unsecured claims
  • Credit card debt
  • Medical debt
  • Personal unsecured debt

Student loans from a government entity are generally non-dischargeable except in rare cases.

If I Am Current On My Mortgage, Can I Still Keep My Home In A Chapter 7 Bankruptcy?

It depends on how much equity you have in the home. If you have substantial equity in your home, then Chapter 7 may not work. When you file Chapter 7, you create a bankruptcy estate. A trustee is appointed to manage that estate and try to maximize the estate’s value to pay your creditors.

Suppose you have equity in your home, which would become part of that bankruptcy estate. In that case, the bankruptcy trustee may sell the house to realize that equity and then pay that equity to unsecured creditors. The value and equity in your home will determine whether a Chapter 7 case would be proper for you.

Can I Stop Paying My Mortgage While I Am In A Chapter 7 Bankruptcy?

Not if you want to keep that house. While you can miss one or two payments, to obtain a discharge at the end of your Chapter 7, you’ll need to catch up if any of those missed payments of your mortgage.

There is flexibility in Chapter 7 to allow for a missed payment. You’ll need to correct it and get

those payments made to obtain your discharge at the end of the case.

Will I Have To Give Up All My Property And Assets When I File A Chapter 7 Bankruptcy?

If you have assets that have equity, there is a potential that the trustee will want to sell those assets to maximize the value of your estate to pay unsecured creditors.

When determining whether Chapter 7 is right for you, one of the primary tasks we would undertake would be to look at your assets and determine if you have any unsecured assets with equity. If so, we must consider the potential that the trustee could sell those as part of the bankruptcy or consider a Chapter 13 instead of a Chapter 7 bankruptcy.

Can A Lender Repossess My Car During A Chapter 7 Bankruptcy?

During a Chapter 7 bankruptcy, a lender could repossess your automobile if you are behind in your car payments.

As a part of any Chapter 7, we would need to ensure you are caught up on payments before the bankruptcy to avoid that situation. In Chapter 7, if you are behind, the lender could come in and potentially get relief from the stay to foreclose on the car. You have the option, if it’s an expensive lease or an expensive payment, to reject that contract and turn that car back over to the lender and purchase a different vehicle that is more affordable.

Will I Lose Social Security Benefits If I File For Bankruptcy?

Your social security income is not subject to any creditor other than the IRS. When filing a bankruptcy, your social security income is not factored in as something that a creditor could grab.

For more information on Automatic Stay Under A Chapter 7 Bankruptcy, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (205) 506-3354 today.

John W. Clark

Call Us Now For A Personalized Case Evaluation
(205) 506-3354