Filing Chapter 7 Bankruptcy in Sacramento? Here’s What You Need to Know.

Chapter 7 bankruptcy is the most popular form of bankruptcy in Sacramento. For many people chapter 7 bankruptcy is cheap, eliminates significant debt and only takes a few months to complete.  However, before filing chapter 7 bankruptcy in Sacramento there are a few things to know.

You Can Lose Property

Property that can’t be protected in chapter 7 bankruptcy using State or Federal exemptions can be sold by the Trustee.  Also, people who file chapter 7 bankruptcy usually cannot dismiss their case to protect property the Trustee intends to sell.  In other words, once a chapter 7 case is filed any property that can’t be protected using bankruptcy exemptions is vulnerable to sale.  To make sure that your property will be protected in chapter 7 bankruptcy consult a local attorney.

Bankruptcy Costs More Than Attorney Fees

As discussed in “How Much Does A Sacramento Bankruptcy Attorney Cost?” the total cost of chapter 7 bankruptcy is greater than attorney fees.  Apart from attorney fees clients often pay the $335 court filing fee before filing or through a 4 month installment plan.  In addition, clients may have to pay for credit counseling, a credit report and tax transcripts.  However, some attorneys quote a flat fee that covers some or all of the aforementioned items.

You Can’t Fall Behind on Your Mortgage or Car Payment

If you want to keep your home or car don’t stop payments before or during your chapter 7 bankruptcy.  If you fall behind you may be in default, and while the creditor can’t sue you personally (assuming you get a discharge), they can repossess/foreclose on the property in which they have a security interest.

Attorney Fee Payment Plans Rarely Work Out

Say you find a professional Sacramento bankruptcy attorney who says that based on your income over the past 6 months you qualify for chapter 7 bankruptcy.  This attorney quotes $1,500 and you can retain for no money down; you’ll just pay $100 a month for 15 months.  The problem?  You can only file chapter 7 bankruptcy after the $1,500 is paid in full.  Furthermore, there’s no guarantee that you will still qualify for chapter 7 bankruptcy by the time the attorney is paid.  Likewise, if a creditor sues, garnishes your wages, etc., and you need to file right away, the attorney isn’t obligated to file your case until he’s paid in full, and if you switch attorneys or decide to not file you probably won’t get a refund.  Accordingly, the safest course of action is to find an attorney you can afford to pay in full on day 1.

-By Adam Garcia