Frequently Asked Questions for Chapter 7 Bankruptcy

Bankruptcy is a legal proceeding in which a consumer who cannot afford to pay his or her debts can get a financial fresh start. The right to file for bankruptcy is provided by federal law, and all bankruptcy cases are handled in federal court. Filing bankruptcy can immediately stop all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law.

A Chapter 7 bankruptcy involves a trustee who gathers and sells the debtor's nonexempt property and uses the proceeds of such property to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code. Accordingly, potential debtors should realize that the filing of a petition under chapter 7 may result in the loss of property. In addition, part of the debtor's property may be subject to liens and mortgages that pledge the property to certain creditors (i.e., secured creditors). A debtor will be required to state his or her intentions regarding such liens or mortgages by either surrendering or retaining the property.

We can help you determine if any of your property may be at risk if you file a Chapter 7 bankruptcy. As discussed elsewhere on this website, most consumers who file a Chapter 7 bankruptcy are able to keep most, if not all, of their property including their home, vehicles, bank accounts, retirement accounts, household furniture and potentially other property. To find out more about Chapter 7 bankruptcy, please contact us.

There is a misconception that you have to give up all or most of your property when you declare bankruptcy. Whether you lose property or not will be greatly dependent upon the amount and type of property you own. Most consumers who file a Chapter 7 bankruptcy are able to keep most, if not all, of their property, which includes their home, vehicles, bank accounts, retirement funds, household furniture and other household items as well as certain property not mentioned. This is because of the applicable Federal or State exemption laws that are provided to consumers who file for bankruptcy relief. Most individuals who file a Chapter 7 bankruptcy are able to use these exemption laws to protect all of their property. To find out if your property including your home and vehicle(s) are protected should you decide to file a Chapter 7 bankruptcy, please contact us.

In fact, you may already be at risk of losing property if you do not file bankruptcy or seek some other debt resolution assistance. If you have not been paying your debts, your creditors have a right to sue you for the debt that you owe them. If your creditors obtain a judgment in a court of law, they may be able to attach liens to your home, sell certain personal property or garnish bank account(s) and, in limited circumstances, certain creditors can even garnish wages in Pennsylvania. If you would like to know which types of creditors can garnish wages in Pennsylvania, please contact us.

In the event you have too much property and a portion of that property is nonexempt or at risk, there is a bankruptcy alternative to filing a Chapter 7 bankruptcy. You could file a Chapter 13 bankruptcy and keep your property while you pay a percentage of your general unsecured debts such as credit card debt or medical bills. The percentage you pay towards your general unsecured debts could be as low as 1% and up to 100%. The percentage amount you pay will depend on the value of the nonexempt property, the outstanding balance on your overall general unsecured debt and possibly other factors. In Chapter 13 bankruptcy, you pay back your general unsecured debts such as credit card debts at 0% interest. To learn more about Chapter 13 bankruptcy, click here.

To find out if your property could be at risk if you file a Chapter 7 bankruptcy, please contact us.

Most consumers who file a Chapter 7 bankruptcy will not lose their home or vehicle. However, it is worth mentioning certain factors that will be considered. First, are you current or behind on your mortgage payments or vehicle payments? If you are in good standing with your mortgage lender or vehicle lender, you will want to remain that way prior to, during and after the Chapter 7 bankruptcy case. Once you are behind on your mortgage payments or vehicle payments, your mortgage lender may start foreclosure proceedings or your vehicle lender may repossess your vehicle. Bankruptcy can help prevent a foreclosure or repossession, but whether you file a Chapter 7 bankruptcy will depend on how far behind you are on your mortgage payments or vehicle payments and whether your income will allow you to pay the delinquency during the pending Chapter 7 case. For example, if you are behind on your mortgage payments by 3 months or more and want to keep your home, it might be necessary to file a Chapter 13 bankruptcy rather than a Chapter 7 bankruptcy. To learn more about Chapter 13 bankruptcy, please click here. Specifically, you may want to read “Why can’t I file a Chapter 7 bankruptcy to save my home?” under FAQ's for Chapter 13.

Keep in mind that a Chapter 7 discharge eliminates your personal liability on dischargeable debts. It does not prevent your secured creditors such as mortgage lenders or vehicle lenders from recovering the property (i.e., home or vehicle) should you fail to make payments towards your home loan or vehicle loan after receiving a Chapter 7 discharge. In other words, if you want to keep your home out of foreclosure and/or prevent the repossession of your vehicle, you must stay current with your home and/or vehicle loan payments before, during and after a Chapter 7 bankruptcy. When you file a Chapter 7 bankruptcy, you will have to file a document known as the “Statement of Intention.” It is through this document that you indicate to the court and your creditors what you plan to do with debts secured by your property. To learn more about the involvement of your home or vehicle in bankruptcy, please contact us.

If you are in good standing with your mortgage lender or vehicle lender, your lender may request that you agree to a reaffirmation of its loan. In such cases, the court will have to approve the reaffirmation agreement(s). If the agreement places too heavy a burden on you and/or your family or is not in your best interest, the court may disapprove it. By signing such agreements, you are agreeing to remain personally liable for your mortgage or vehicle loan after bankruptcy. If you find yourself unable to make the mortgage payments or vehicle payments after your bankruptcy case is over, you will still be liable for any deficiency on the reaffirmed loan(s). Sound like a lot to think about? If you were to hire EDF LAW, we will help guide you down the right path when dealing with the issue of reaffirmation. We will help you weigh the pros and cons of signing such agreements and whether it would be right for you.

Another factor that must be considered in deciding whether you can keep your home or vehicle is the amount of equity you own in those assets. The reason the amount of equity is considered is because of the exemption laws (as discussed in Question #2 above). Most consumers who file a Chapter 7 bankruptcy do not own enough equity in their home or vehicles, which puts those assets at risk. In other words, most consumers will be able to protect the equity they own in their home or vehicle when filing a Chapter 7 bankruptcy.

Even if you do have too much equity in your home or vehicle and those assets would be at risk in a Chapter 7 bankruptcy, all is not lost. You may still have the option of keeping your home or vehicle by filing a Chapter 13 bankruptcy. To learn more about Chapter 13 bankruptcy and how it helps, click here.

To learn more about the involvement of your home or vehicle in bankruptcy, please contact us.

Yes. When you file a Chapter 7 bankruptcy, or any type of bankruptcy for that matter, your property, with some exceptions, becomes property of the bankruptcy estate and the trustee assigned to your case has responsibilities when it comes to the bankruptcy estate. The trustee is responsible for making sure all of your property is listed in your bankruptcy paperwork, the values are accurate and the exemptions applied to each asset are appropriate. An experienced bankruptcy attorney can help you determine if any of your property is at risk of liquidation prior to filing a Chapter 7 bankruptcy. At EDF LAW, we will review each asset with you to determine if the asset could be protected should you file a Chapter 7 bankruptcy.

You might be wondering what types of assets the trustee will be looking for. Well, besides the obvious assets like your home, vehicles, retirement accounts, bank accounts, jewelry and household furniture, other assets could include:

There are Federal and State exemption laws that can protect your assets up to a certain dollar amount per asset when you file a Chapter 7 bankruptcy. To find out if your assets could be fully protected if you filed a Chapter 7 bankruptcy, please contact us.

You will want to have a good grasp of what property you own prior to meeting with a bankruptcy attorney. The best thing you can do is make a list of your property and bring it with you to your initial consultation. This does not mean you need to list with great detail every item in your home. We do not need to know the value of your salt & pepper shakers or the quantity of spoons, forks and knives in your kitchen drawers. Let common sense be your guide.

An experienced bankruptcy attorney will be able to properly inform you if any of your property could be at risk by filing a Chapter 7 bankruptcy. To find out if any of your property could be at risk if you were to file a Chapter 7 bankruptcy, please contact us.

Yes. If you decide you cannot afford your mortgage payments or vehicle payments and do not want the burden any longer, you can surrender your home or vehicle in a Chapter 7 bankruptcy. If you receive a discharge in your Chapter 7 bankruptcy case, the balance on the mortgage or vehicle loan can be eliminated in terms of your personal liability. This does not mean you get to keep the asset (i.e., home or vehicle). Before you take any action in this regard, please contact us. We can help you with the legal issues related to surrendering your home or vehicle in a Chapter 7 bankruptcy.

To learn more about surrendering your home or vehicle in a Chapter 7 bankruptcy, please contact us.

This is a good question. From the moment you hire EDF LAW or another law office to help you with your debts, there are Federal and State laws that protect you from your creditors. Once you give them notice that you hired us, your creditors are then obligated to follow these Federal and State laws and stop calling you. The required notice can be given over the phone and we will give you the information needed to inform your creditors when you retain our office. To silence your phone, all that is required is an initial retainer payment, which can be as low as $100.00. To learn more about our affordable monthly payment plans, see “How do I pay my legal fees for a Chapter 7 bankruptcy?” (Question #16 below).

In fact, our office will review your case to determine if any of your creditors have violated the collection laws and we can seek monetary damages on your behalf. At EDF LAW, in addition to helping people file for bankruptcy relief, we help consumers with other legal matters including seeking damages for collection law violations by their creditors.

A creditor or collector may not:

Contact us to find out how to silence the collection phone calls.

No. You need to file the Chapter 7 bankruptcy to prevent lawsuits or repossessions. The initial retainer as mentioned above in question #6 will silence your phones while you make arrangements to pay the balance of your bankruptcy legal fees. This will help alleviate the aggravation, stress and anxiety that is caused by the harassing phone calls while you save for your Chapter 7 bankruptcy. In order to prevent lawsuits, it will be necessary to file a Chapter 7 bankruptcy or resolve your debts by other means. We will properly advise you as to when the bankruptcy filing will be necessary in the event you are facing an actual lawsuit, threat of a lawsuit or for any other reason that would require filing sooner rather than later. We start to work for you from the moment you pay the initial retainer, which can be as low as $100.00.

See “How do I pay my legal fees for a Chapter 7 bankruptcy?” (Question #16 below) to learn more.

Yes. In most circumstances, the moment you file the Chapter 7 bankruptcy, your creditors are required to stop all collection efforts. This would include most pending civil lawsuits, threats to begin civil lawsuits, collection letters, collection phone calls, threats of repossession, threats of utility shutoffs, garnishments and foreclosure actions as well as other potential collection efforts.

The reason your creditors are required to stop all collection efforts is because of the automatic stay section of the Bankruptcy Code. This law prevents most creditor collection attempts while the bankruptcy case is pending. In other words, your creditors are “stayed” from continuing their efforts to collect the debt that you owe them. However, there are a few exceptions where the automatic stay laws do not prevent collection attempts. To find out who does not have to abide by the automatic stay laws or general questions regarding the automatic stay laws, please contact us.

When you obtain a Chapter 7 discharge, you will no longer be personally liable for the dischargeable debts unless you voluntarily reaffirm them (reaffirmation agreements are discussed at your initial consultation). Assuming your creditors were not able to properly object to your discharge, they will not be allowed to personally hold you liable for the dischargeable debts and will not be allowed to collect these debts from you ever again. This includes suing you for the debt. The main purpose for consumers to file a Chapter 7 bankruptcy is to obtain a discharge and gain a financial fresh start.

Remember, your secured loans such as home loans and vehicle loans should be treated differently. Assuming you do not reaffirm these types of debts and you obtain a discharge from them, it will only be for personal liability. If you still want to keep your home and/or vehicle, you will have to stay current with your mortgage payments and/or vehicle payments before, during and after the Chapter 7 bankruptcy case. For more information regarding your home and vehicle loans, please see question #3 above.

Please note however that certain debts including, but not limited to, student loans, certain taxes and domestic support obligations are not dischargeable. Therefore, you will still be personally liable for all non-dischargeable debts after your case is closed.

To find out more about whether your debts are dischargeable, please contact us.

In order to file for Chapter 7 bankruptcy, an individual or married couple must qualify under the Means Test. The Means Test takes into consideration an individual’s or married couple’s household income and compares that income with the median income for your State (i.e., Pennsylvania). If your household income is lower than the median income for your State, then you may be eligible for a Chapter 7 bankruptcy. However, if your household income is greater than the median income for your State, other calculations will be necessary to determine whether or not you are eligible for a Chapter 7 bankruptcy.

Your disposable income, if any, will also be reviewed to determine if you are truly unable to pay your debts. In other words, after you deduct your necessary living expenses, are there any funds left to pay towards your unsecured debts such as credit cards or medical bills? If the answer is no or minimal, then a Chapter 7 bankruptcy may be right for you. We can help you determine if your household budget is reasonable for purposes of filing a Chapter 7 bankruptcy.

There is a misunderstanding that most consumers cannot file a Chapter 7 bankruptcy now that the laws have changed. This is not true. The bankruptcy laws changed in late 2005, but these changes did not make it impossible to file Chapter 7 bankruptcy. The best way to find out if you are eligible for a Chapter 7 bankruptcy is to contact a bankruptcy attorney.

In the event you are not eligible for a Chapter 7 bankruptcy, there is a different type of bankruptcy that may be right for you. To learn about Chapter 13 bankruptcy, click here.

If you previously received a Chapter 7 discharge within the last 8 years or a Chapter 13 discharge within the last 6 years and did not pay at least 70% of your unsecured debt, you may not be eligible for another Chapter 7 discharge. However, you may be able to file a Chapter 13 bankruptcy. To learn more about Chapter 13 bankruptcy, click here.

Each case is unique and there may be other factual circumstances related to your situation that will affect your eligibility. To find out if you are eligible, please contact us.

Chapter 7 bankruptcy is not right for everyone. However, if you are experiencing any or all of these circumstances then filing Chapter 7 bankruptcy might be right for you:

• An inability to pay your credit card bills, medical bills or other debts.

• You are barely able to pay your necessary living expenses.

• You feel like you are “robbing Peter to pay Paul.”

• You are hesitant to pick up the phone when it rings out of fear it is a collection call.

• You have been sued by a credit card company or collection agency.

• You no longer want your home and you owe more than it is worth.

• You are behind on your vehicle payments and close to a possible repossession. If you act promptly, you may even be able to get your car returned to you after repossession.

• You are facing a potential utility shutoff.

• Your wages or bank account(s) are being garnished.

• There may be other reasons that make Chapter 7 bankruptcy right for you, please contact us.

If you are experiencing any of these circumstances, it might be worth your time to contact us.

A Chapter 7 bankruptcy cannot cure every financial situation. A Chapter 7 bankruptcy can do wonders if you are in financial jeopardy, but filing is not a decision to be taken lightly. You should gain as much of an understanding of the process as possible before you decide to file a Chapter 7 bankruptcy. If you are experiencing any of these circumstances then filing Chapter 7 bankruptcy might not be right for you:

• Your debt concerns are mainly domestic support obligations, student loans, certain criminal fines or certain tax obligations. These debts are considered non-dischargeable debts and a Chapter 7 bankruptcy might not help eliminate these types of debts. However, if you also have dischargeable debts such as credit card debt or medical bills, Chapter 7 bankruptcy still might be right for you. Even though you cannot eliminate your non-dischargeable debts, you can eliminate some of your debt and this might be enough to help you meet your other financial obligations.

• You want to protect co-signors on your debts. When a relative or friend has co-signed for a loan, they will still be liable for the debt even though you obtained a discharge from the same debt. However, if your friend or relative is also thinking of filing bankruptcy or does not mind the notion that they will still be responsible for the debt, then Chapter 7 bankruptcy still might be right, we will provide you with personalized and affordable legal representation that maximizes the best possible outcome that the law allows.

• Your spouse refuses to file bankruptcy and all or most of your dischargeable debts are joint accounts.

• You own nonexempt property that you are not willing to part with.

• You want to keep certain general unsecured debts out of your bankruptcy. For example, you refuse to include all of your credit card accounts in your bankruptcy. You must include all of your debts in your bankruptcy.

• There may be other reasons you should not file a Chapter 7 bankruptcy, the best way to find out is to contact us.

What is right for one person is not necessarily right for another. To find out if filing Chapter 7 bankruptcy is right for you, please contact us. We will evaluate all aspects of your financial situation. We will take into consideration your assets, income, expenses, and future goals and advise you on the best course of action. At EDF LAW, we take pride in making sure our clients are comfortable with the decision to file Chapter 7 bankruptcy. The ultimate decision to file for Chapter 7 bankruptcy is yours. Our job is to educate you on your rights and options as well as the consequences so you can make an informed decision. If you decide that Chapter 7 bankruptcy is right for you and retain EDF LAW, we will provide you with personalized and affordable legal representation that maximizes the best possible outcome that the law allows.

Note: If you previously received a Chapter 7 discharge within the last 8 years or a Chapter 13 discharge within the last 6 years and did not pay at least 70% of the unsecured debt, you will not be eligible for another Chapter 7 discharge. However, you may be able to file a Chapter 13 bankruptcy. To learn more about Chapter 13 bankruptcy, click here.

You may have heard that bankruptcy should be your last resort. While this can be true for some consumers, it is misleading for others. It all depends on what types of measures you are willing and able to undertake to help your debt situation. What may be a “last resort” for one person will not be for someone else. Consumers have different levels of income and different levels of debt. What works for one person may not work for another. For example:

• Attempting to re-finance your home or obtain an equity line of credit using the existing equity in your home for the purpose of paying towards your unsecured debts and/or lowering your interest rates.

  • Although this might be a fix to your high monthly debt payments via a lower interest rate and/or lower monthly payments, you should be cautious when making such decisions. This is especially true if you are on a fixed income or you do not see your income changing much in the course of your remaining employment years. Keep in mind you are turning unsecured debts into secured debts. If you find yourself having difficulty paying these secured debts in the future, it may be more stressful and difficult to deal with the problems associated with these new secured debts.

• Entering into a credit consolidation program, credit counseling program or debt settlement program you saw on television or found on the internet.

  • These programs require you to pay towards your unsecured debts. You should make sure you have sufficient income to complete such programs. Sufficient income means you can pay the monthly payments required by such programs AND also meet your necessary living expenses for the duration of the program. After you have an idea of what your monthly payment would be in one of these programs, are you still barely getting by? This is a crucial question to ask yourself. What will happen if your furnace breaks or you need new tires for your vehicle or some other unexpected necessary expense arises? The people operating these programs do not always give you the facts or truth about your realistic chances of successfully completing such programs. Nor do debt settlement companies always tell you that you are still at risk of lawsuits while they “attempt” to negotiate settlements with your creditors or that there are potential tax consequences for forgiven debt. You can easily be ripped off by such programs. We still live in a world of buyer beware. Remember, if it sounds too good to be true, it probably is.

• Withdrawing or borrowing from your retirement account (IRA or 401(k)) to pay towards your unsecured debts.

  • This money is for your retirement and most people cannot solely live off of Social Security benefits when the time to retire arrives. This might seem like a quick fix in the present, but could hurt you in the long run. You should give serious consideration before making such a move.

  • Most financial advisers advise not dipping into your retirement plan in order to get out of debt. You should speak with your attorney and accountant before doing so. In addition, most retirement accounts are fully protected in bankruptcy.

• Selling your property to pay towards your unsecured debts.

  • Most consumers who file Chapter 7 bankruptcy are able to keep most of their property while gaining a discharge from their dischargeable debts. This is commonly referred to as a “Chapter 7 – No Asset” bankruptcy.

• Negotiating with your creditors directly.

  • If your debts are low or close to manageable, this option may help. Although there are debt negotiating services, these types of companies are not needed if you are capable of picking up your own phone and contacting your creditor(s) yourself. Creditors are willing to work with their clients if it is in their best interest. If a lower interest rate on your credit card debts would help get you back on track, then it is worth an attempt to call your creditor and ask if they would be willing to lower your rates. Of course, there is no guarantee.

  • Since you are on this website, chances are likely that your debts are beyond manageable and you need professional help. In such cases, this option may be a waste of your time and just prolong your anxiety and fears. To find out if negotiating with your creditors could be an option, please contact us.

These measures are just some of the ways consumers have attempted to resolve their debt problems to avoid bankruptcy. But before you decide to take such measures, you should take a moment to think about what you are about to do and whether it is practical and beneficial based on your current level of income and level of debt. Just like your decision to file bankruptcy, these measures should also be carefully weighed so you know it is the right choice for you. Consumers are often tempted to borrow money, take out a second mortgage or consolidate credit cards, but doing so may actually be more expensive and counterproductive in the long run. It is not out of the realm of possibilities that, after you take such measures, you will still need to file a Chapter 7 bankruptcy at a later date.

To find out if Chapter 7 bankruptcy should be your “last resort,” please contact us.

The typical Chapter 7 bankruptcy case will last about five to six months from the initial filing to the closure of the case. There are times when the process can take longer. A bankruptcy attorney can advise you if that is likely the case for you based on your situation.

It is unlikely that you will see the inside of an actual courtroom if you file a Chapter 7 bankruptcy. During your initial consultation, your bankruptcy attorney can better advise you if there are any circumstances in your case that might make it more possible that you would have to go before a judge in a courtroom.

In most Chapter 7 bankruptcies, the only forum where your attendance will be required is the 341 Meeting of Creditors. The 341 Meeting of Creditors is where the assigned Chapter 7 trustee to your case has an opportunity to ask you a few questions under oath. The trustee is not a judge and most trustees are professional and decent people who are not out to get you or embarrass you. Your creditors have a right to attend this meeting but it is uncommon for them to attend. Usually, the meeting will consist of you, your attorney and the trustee. Most of the time, this meeting will be a short and simple procedure where you will be asked a few questions under oath about your bankruptcy forms and your financial situation.

At EDF LAW, you may pay your legal fees in one of two ways. First, you may pay your fees in a lump-sum amount. This is the best way to pay your legal fees if you are looking to quickly file a Chapter 7 bankruptcy. At EDF LAW, we will quote you our fees to file a Chapter 7 bankruptcy at the end of your free initial consultation and help you brainstorm how to obtain the funds necessary to pay the quoted fees.

If you cannot pay a lump-sum payment, no need to panic. That is because we offer affordable monthly payment plans. We understand that not everyone will be able to pay their legal fees quickly. At EDF LAW, we can assist you in implementing a plan that helps you obtain the necessary funds to pay your legal fees.

To find out more about our affordable monthly payment plans and to find out how much it costs to file Chapter 7 bankruptcy, please contact us. We have competitive rates and there are no hidden fees. Your quoted legal fees will include the court filing fee of $299.00 for Chapter 7 bankruptcy.

Please note: if you decide to pay your legal fees via the monthly payment plan, the Chapter 7 bankruptcy case will only be filed after the legal fees are paid-in-full. We will evaluate your case to determine which payment option is right for you based on the circumstances surrounding your financial situation.

The initial retainer allows you to tell your creditors that you hired EDF LAW for the purpose of filing for bankruptcy relief and your creditors, after proper notice, are required to stop calling you based on Federal and State laws. We will take your creditor calls while you save for your Chapter 7 bankruptcy. This will help silence the phone while you make payments toward the balance of your bankruptcy legal fees. We start to work for you from the moment you pay the initial retainer, which can be as low as $100.00.

Please note: if you decide to pay your legal fees via the monthly payment plan, the Chapter 7 bankruptcy case will only be filed after the legal fees are paid-in-full. We will evaluate your case to determine which payment option is right for you based on the circumstances surrounding your financial situation.

If you would like to know more, please see questions #6 & #7 above or you can contact us.

Yes, but how much of an affect will depend on your current financial situation. A Chapter 7 bankruptcy will show up on your credit report and may remain there for up to 10 years. To what degree it negatively affects your credit score depends on your current circumstances and your current credit score. If your credit score is good (i.e., over 640 FICO score), then filing a Chapter 7 bankruptcy will negatively affect your credit score. However, many people who are thinking of filing bankruptcy do not have such a high credit score. If you have been delinquent on various credit accounts for a period of time, chances are good that your creditors have been reporting your delinquent accounts to the credit reporting agencies and your credit report is reflecting those negative accounts. In such scenarios, the Chapter 7 bankruptcy might only have a minimal negative effect on your credit score.

Determining your credit worthiness depends on many factors, including, but not limited to, your debt-to-income ratio and debt-to-available credit ratio. A financial institution that is deciding whether to issue you new credit will review your credit history to determine your risk level. A Chapter 7 bankruptcy will have a negative impact on your ability to obtain new credit for the foreseeable future. However, sometimes a Chapter 7 bankruptcy filing can help your credit worthiness faster than continuing to struggle with your current debt situation. This is because a Chapter 7 discharge wipes out your eligible unsecured debts, thus improving your debt-to-income ratio. You are also barred from obtaining another Chapter 7 bankruptcy discharge for 8 years and financial institutions will consider that fact.

Claims are made by non-bankruptcy debt resolution companies, including credit consolidation companies and debt settlement companies, that filing a Chapter 7 bankruptcy will ruin you and prevent you from ever gaining future credit. They use this tactic to steer consumers away from looking into Chapter 7 bankruptcy as an option for their debt situation. These claims are not true.

Although there is a general understanding of how a Chapter 7 bankruptcy will affect your credit score, you should not rely solely on this general understanding because the affects on credit will vary from consumer to consumer. In order for us to give you a more accurate analysis of how a Chapter 7 bankruptcy will affect your credit score, we will need to know your current credit score and your current financial situation. Please contact us if interested in obtaining a more specific analysis tailored to you.

Yes. You may have to wait a few years before you are eligible to apply for certain types of loans, but filing Chapter 7 bankruptcy will not destroy your ability to obtain new credit for the rest of your life. Your ability to obtain new credit after a Chapter 7 bankruptcy discharge is based, in part, on your risk level (i.e., the risk that you will default on the new credit issued). Sometimes a Chapter 7 bankruptcy will help your credit worthiness by improving your debt-to-income ratio. Your debt-to-income ratio is improved by eliminating your debts that make you appear to be a higher risk in your current pre-bankruptcy financial state. In addition, you will be barred from obtaining another Chapter 7 discharge for 8 years and this will be considered by financial institutions deciding to issue you new credit.

Beware of predatory lending. The term predatory lending first evolved from unethical mortgage lending practices, but now has expanded to include payday lenders.

After obtaining a Chapter 7 discharge you may start to receive offers for new credit. Why? There are companies who target people fresh out of bankruptcy for new credit. They offer programs specifically geared to consumers who have received a bankruptcy discharge and are looking to reestablish their credit. Please be careful when accepting such offers. You could find yourself back in an uncontrollable debt situation. It will be important to assess your ability to pay future loan obligations prior to seeking new credit. In today’s market, it has become more difficult to obtain credit regardless of having good credit or bad credit. Hopefully through responsible lending and mindful borrowing you will be able to leave your debt problems behind you. We can help you manage life after bankruptcy. Please contact us.

The main negative consequence to filing a Chapter 7 bankruptcy is the effect it will have on your credit score. A Chapter 7 bankruptcy can show up on your credit report for up to 10 years. As a result, a Chapter 7 bankruptcy could affect your ability to obtain credit including favorable interest rates in the future. Factors that are considered include your debt-to-income ratio, the terms of the new credit sought and the economic market.

However, the affect a Chapter 7 bankruptcy has on your credit score will depend on your current financial situation. If your credit score is good (i.e., over 640 FICO score), then filing a Chapter 7 bankruptcy will negatively affect your credit score. If your credit score is bad or on the brink of going bad because of missed payments to your creditors, then a Chapter 7 bankruptcy may not have the negative effect you might think. Please read questions #18 & #19 above to find out more on this topic or contact us.

The bottom line is that you should weigh your options and compare whether the benefits of filing a Chapter 7 bankruptcy outweigh the negative affects of having a bankruptcy show up on your credit report and vice versa. We often hear clients say they are sick of credit and are just glad to be done with the hassle of dealing with their uncontrollable debts. There may be challenges after filing for bankruptcy, but for most consumers, these challenges are a welcome change to the reality of a lifetime of debt.

Other negative consequences may include, but are not limited to:

• Being barred for 8 years from obtaining another Chapter 7 discharge. However, this is not that negative considering you probably do not want to go through this again.

• You may not be able to keep all of your property. We can help you determine if this could be the case for you.

• The feelings of guilt or regret that some consumers experience after filing a bankruptcy case.

• Even though your personal liability is eliminated when obtaining a discharge of your dischargeable debts, you will still be required to pay your mortgage payments or vehicle payments in the event you desire to keep your home or vehicle. You may also have to sign a reaffirmation agreement for these types of debts.

• Not gaining the benefit of a discharge from an otherwise dischargeable debt because you incurred that debt within a certain timeframe prior to filing bankruptcy. This scenario typically involves credit card debt. Some consumers mistakenly think they can use their credit cards as much as they want because they are going to file bankruptcy. This is wrong. If you are still using your credit cards and thinking of filing bankruptcy soon, you should stop using the credit cards and contact a bankruptcy attorney.

• Transferring or selling assets for substantially less than the fair market value within a certain timeframe before filing bankruptcy. This can lead to problems for you and for the individuals involved in the transfer. There are too many scenarios to list so your best option is to contact a bankruptcy attorney to discuss the transfer you made, if any.

• To find out if any of these negative consequences or other negative consequences would apply to your situation or if you have a different question or concern, please contact us.

Finally, it is worth mentioning that our clients are required to be truthful and forthcoming about everything we ask them and they must fully disclose the value of all their property and all sources of income. Not telling the truth or attempting to hide income or assets can only lead to negative consequences. If you are caught, you could face more than just losing your right to a discharge of your debts. You could face penalties and/or a possible criminal referral to the Department of Justice. The best advice we give our clients is to be truthful. As long as you are truthful, we are able to properly assess whether bankruptcy is right for you and whether it will work for you.

The previous paragraph was not meant to scare you, but it probably did. Most people are honest, law-abiding citizens. Please do not confuse making an honest mistake with the intent to defraud a creditor. Honest mistakes are not the same as intentionally hiding assets or income. Honest mistakes can be corrected without the harsh consequences mentioned in the previous paragraph. We are all human and we all make mistakes. An amendment to your paperwork and a possible re-assessment of your eligibility to obtain a Chapter 7 discharge might be necessary, but it is correctable. After you have retained our office, if you realize you made a mistake, contact us right away so the mistake can be corrected in your file or case.

A Chapter 7 bankruptcy could have negative consequences in exchange for the elimination of your dischargeable debts. But these negative consequences should be carefully weighed against the idea that you will gain relief from certain, if not all, of your debts. In the initial consultation, we are able to assess your eligibility to file a Chapter 7 bankruptcy and it is our goal to properly advise you of the consequences in filing for such relief. You will not be left in the dark as to what will happen next. We just ask that you be truthful and commit to full disclosure. We’ll take it from there.

To find out more about how a Chapter 7 bankruptcy will affect your life, please contact us.

Our experience has been that consumers on fixed incomes who are already struggling with their debts do not perform well with credit consolidation and debt settlement programs. Why? There are many reasons for failing to successfully complete a credit consolidation program or to successfully settle your debts through a debt settlement company. The main reason for failure is that an individual’s income is not sufficient to allow for success. This is not to say that consumers were not helped by such programs. You should realistically determine if these programs can realistically resolve your current debt situation based on your current income. Most consumers would rather solve their debt problems without filing a bankruptcy and they can be blinded by the promises of companies that offer alternatives to bankruptcy. Make sure you do your homework and plan accordingly. Remember, if it sounds too good to be true, it probably is.

What can end up happening is that you waste hundreds, if not thousands of dollars, while at the same time prolonging your agony, only to end up in a bankruptcy attorney’s office seeking help. We often hear our clients who have unsuccessfully attempted credit consolidation or debt settlement programs say they wish they had spoken with a bankruptcy attorney before entering into such a program.

It is a no-lose situation to contact an experienced bankruptcy attorney to find out if Chapter 7 bankruptcy should be considered as one of your debt resolution options. It is free and confidential and there is no obligation to file a Chapter 7 bankruptcy just because you came in for a consultation. EDF LAW takes pride in ensuring that our clients are comfortable and well-informed before making the final decision to file a Chapter 7 bankruptcy. It is your life and your debt and, as a result, it should be your final decision on how to attack those debts. At EDF LAW, we give you the facts and information necessary to make the proper decision and we do it for free. There’s no sales pitch and if we feel there is a better option for you than bankruptcy, we will let you know. It is never easy to accept that bankruptcy is your best option, but when it is, we will be there to help you through it, to help you keep your chin up and to help you gain a financial fresh start.

The Federal Trade Commission (FTC) advises to stay away from any company that makes untrue claims:

• Promises that unsecured debts can be paid off for pennies on the dollar. The truth is that there is no guarantee that any creditor will accept partial payment of a legitimate debt. Your best bet is to contact your creditor directly as soon as you are having problems making payments.

• Requires substantial monthly service fees and demands payment of a percentage of what they’ve supposedly saved you. The truth is that most debt relief companies charge hefty fees for their services, including a fee to establish the account with the debt negotiator, a monthly service fee, and a final fee – a percentage of the money you’ve supposedly saved.

• Tells you to stop making payments to or communicating with your creditors. The truth is that if you stop making payments on a credit card, expect late fees and interest to be added to the amount you owe each month. If you exceed your credit limit, expect additional fees and charges to be added. Your credit score also will be hurt by not making payments.

• Claims that creditors never sue people for not paying their unsecured debts. The truth is that creditors may have the right to sue you to recover the money you owe. And sometimes, when creditors win a lawsuit, they have the right to garnish your bank accounts or put a lien on your home.

• Claims that they can remove accurate negative information from your credit report. The truth is that no company or person can remove negative information from your credit report that is accurate and timely. It is illegal to remove such information.

Read more at www.ftc.gov.

To find out if you should choose Chapter 7 bankruptcy over credit consolidation or debt settlement, please contact us.

This is simply not true. Not everyone who files bankruptcy is the type of person who recklessly and frivolously spends money knowing they have a way out after all the fun. If that were the case, then why do over 1 million Americans file bankruptcy each year? The reality is that most people who file bankruptcy are good people who had an unfortunate circumstance in their life or their family’s lives. Most consumers who file bankruptcy suffer from a loss of income, health issues, divorce or some other legitimate reason that has caused their current financial situation.

Shame should not be the sole reason why you do not look into bankruptcy as an option for your debt problems. It is understandable that you may have apprehension in speaking with a bankruptcy attorney. Keep in mind we are professionals that help people with their debts on a daily basis. We will not judge you and reprimand you. We will listen to you and give you the help you need. If we cannot help you, we will be honest with you. Regardless of the outcome, coming into our office for a free consultation is confidential and there is no obligation to sign up and file a bankruptcy case just because you came in to learn how it could help you. It will always be your decision. We supply you with the information needed to make that decision.

To find out whether a Chapter 7 bankruptcy is right for you, please contact us.

Deciding to file a Chapter 7 bankruptcy is a serious decision. Who you hire to represent you as your attorney can be just as important. The right attorney can make all the difference in the world. You will want advice from a quality bankruptcy attorney who knows the bankruptcy laws. You will also want a bankruptcy attorney who has the time for you. Not all attorneys service bankruptcy cases in a professional manner. Being able to trust that your attorney will guide you down the right path to obtain the results you are seeking is crucial. Also of importance is the level of respect and attentiveness that your attorney shows towards you. Attorneys are not just advocates for your rights - they are also counselors. The right attorney will be able to address your concerns and help you through this difficult time.

At EDF LAW, you will receive the attention, compassion and professionalism you deserve. We will not take your financial situation lightly nor will we treat you as just another number. We will develop a plan that keeps your best interests in mind and that helps you obtain the financial relief you are seeking. We will maximize the benefits that the bankruptcy laws allow and we will go after your intended result, which is a financial fresh start. All we ask of you is that you are truthful and commit to full disclosure of all the information we need to properly assess your case. We take pride in not only making our clients feel at ease, but also in properly preparing your case so everything goes as smoothly as possible. Most problems that occur once a Chapter 7 bankruptcy is filed are avoidable. Contact EDF LAW today and sleep better tonight.