QIM 34 | Bankruptcy | Caffeine Law

The Quick Picture

Chapter 7 is a liquidation bankruptcy, but for the typical middle-class filer almost nothing actually gets liquidated. You file, a trustee reviews your paperwork, you attend one short meeting of creditors, and a few months later the court enters a discharge that legally erases the covered debts. The whole case usually runs about 90 to 120 days from filing to discharge.

What It Erases

Chapter 7 discharges most unsecured debts: credit cards, medical bills, personal loans, old utility and phone balances, and deficiency balances after a repo or foreclosure. What it does not erase includes most taxes, domestic-support obligations, and (in most cases) student loans. Secured debts like a car or house are treated separately — you can keep the collateral if you keep paying.

What You Keep

California's exemption laws protect your property. For most families that means your household goods, clothing, tools of the trade, a vehicle up to a set value, retirement accounts, and often your home equity. Because the trustee can only touch non-exempt property — and most middle-class filers have none — Chapter 7 ends with the debt gone and your belongings intact.

What to Do

Chapter 7 is powerful, but eligibility runs through the means test and your exemptions have to be claimed correctly. A Caffeine Law consultation tells you in one conversation whether Chapter 7 fits — and what you'd keep.

Caffeine Law — consultation | Michael Benavides, Esq., CA Bar No. 270714 | 707-362-4166 | attorneymichaelbenavides.com

ATTORNEY ADVERTISING. Caffeine Law is a trade name of the law practice of Michael Benavides, Esq., California State Bar No. 270714. General information only — not legal advice, and no attorney-client relationship is formed by reading this. Bankruptcy outcomes depend on your specific facts; exemption amounts, the median-income figures, and deadlines change, so verify current numbers. Prior results do not guarantee a similar outcome.