Mario T. LangoneAttorney at Law
Consumer bankruptcyChapter 7 bankruptcy in Fresno & the Central Valley
Chapter 7 is often called a “fresh start” bankruptcy. For many people it wipes out credit card debt, medical bills and personal loans in a matter of months — and stops collectors while it does.
What is Chapter 7?
Chapter 7 is the most common type of bankruptcy for individuals. You list your debts, income, property and expenses with the federal bankruptcy court. A court-appointed trustee reviews your case. At the end, the court grants a discharge — a court order that releases you from personal liability for most of your debts, so creditors can no longer try to collect them.
Bankruptcy cases are handled in federal court. Cases for people living in the Fresno area are filed in the U.S. Bankruptcy Court for the Eastern District of California.
What Chapter 7 can stop
As soon as your case is filed, an “automatic stay” generally goes into effect. When filed properly, bankruptcy can stop:
- Foreclosures & repossessions
- Bank levies
- Wage garnishments
- Creditor harassment
- Lawsuits
- Evictions
- Utility disconnections
- Collections on public-benefit overpayments
- Tax collection*
- Collection calls & letters
*Temporarily or permanently, depending on the type of tax.
Do I qualify? The means test, in plain English
To file Chapter 7, most people with mainly consumer debts must pass the means test. It’s a way of checking whether you could realistically repay some of your debts instead.
Compare your income to the California median
We average your household’s gross income over the six months before filing and compare it to the median income for a California household of your size. If you’re at or below the median, you generally qualify.
Above the median? You may still qualify
If your income is higher, the test subtracts allowed living expenses — housing, transportation, taxes, car and mortgage payments and more. If there’s little left over each month, Chapter 7 may still be available.
Mostly business debt? The test may not apply
If most of your debt comes from a business rather than personal spending, you may not have to take the means test at all.
What can I keep?
Chapter 7 is sometimes called “liquidation,” which sounds scarier than it usually is. California law lets you protect property up to certain limits, called exemptions. Depending on your situation, these can cover equity in your home, a vehicle, household goods, tools of your trade, retirement accounts and more. California has two different exemption systems, and choosing the right one for your situation is one of the most important things your lawyer does. Many Chapter 7 filers keep everything they own.
The bankruptcy court may be more interested in using your assets to pay your debts than in helping you keep your property. Experienced representation helps make sure your property is properly protected.
Which debts are wiped out?
| Usually discharged | Usually not discharged |
|---|---|
| Credit cards Medical bills Personal loans & payday loans Past-due utility bills Many old judgments and collection accounts Deficiency balances after repossession or foreclosure | Child support and alimony Most student loans Most recent income taxes Criminal fines and restitution Debts from drunk-driving injuries Debts you agree to keep paying (like a car loan you “reaffirm”) |
The Chapter 7 process, step by step
Free consultation
Meet with Mario one-on-one, in person at his office or by phone or video. Talk through your debts, income and goals, and get a straight answer on whether Chapter 7 makes sense.
Gather your paperwork
We’ll give you a simple checklist: pay stubs, tax returns, bank statements and a list of what you owe and own. You also take a short credit-counseling course.
We file your case
Mario prepares and files your petition with the bankruptcy court. The “automatic stay” takes effect, which generally stops most collection activity right away.
Meeting of creditors
About a month after filing, you attend a short “341 meeting” with the trustee, currently held by video. Mario prepares you and is with you the whole time.
Your fresh start
After a short financial-management course, the court issues your discharge — often about three to four months after filing.
What to bring to your consultation
The most important thing to bring is recent proof of income: your recent pay stubs or other income records, such as benefit statements or business income records. If you have them, these are helpful too:
- Your last two years of tax returns
- Recent bank statements
- Bills, collection letters, and any lawsuit or garnishment papers
- Information on your home, vehicles and loans
Don’t worry if you don’t have everything yet. Mario will let you know what else your case needs.
Chapter 7 or Chapter 13?
Chapter 13 is a three- to five-year repayment plan. It can make more sense if your income is too high for Chapter 7, if you’re behind on a mortgage or car and want to catch up, or if you have property you’d otherwise lose. Mario files both, so you’ll get an honest recommendation either way.
Find out if Chapter 7 is right for you
A free, confidential conversation with Mario is the best first step.