What is Chapter 7 Bankruptcy?
Bankruptcy doesn’t have to be a totally negative thing. If you’ve got unsecured debts, it may be in your best interest to go the route of a Chapter 7 bankruptcy. You won’t be able to undertake this completely on your own. That’s why you should seek out an Experienced chapter 7 bankruptcy attorney who will know how to get through this process and you won’t have to worry about this being done incorrectly.
What Exactly Is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy, which is also known as liquidation or straight bankruptcy, allows you to rid yourself of several kinds of unsecured debts. These unsecured debts include medical bills, personal loans, and credit card debt. This should be considered as a last resort to resolving financial issues. It’s a great way to reset your finances and has helped many people feel a sense of relief and have a fresh start.
It’s important that you go into the Chapter 7 process understanding that there will be a long term negative effect when it comes to your credit. You’ll also be expected to give up some possessions, depending on if they’re a part of your debt. In fact, you may be asked to sell your non-exempt assets.
Chapter 7 really is the fastest and simplest type of bankruptcy. For this reason, it’s also the most common for people to get, at 63 percent of all bankruptcy cases in 2019.
How Do You Know if Chapter 7 is Right for You?
You won’t automatically be able to request to start Chapter 7 bankruptcy proceedings. You will need to give your lawyer your records that detail your income, expenses, and the secured and unsecured debt you have. Then, they’ll conduct a means test to see if your disposable income is under the median income for your state.
Since the income level for the means test varies by state, there’s no simple way for you to determine if you qualify. Once you know that you are eligible, you can go over the particulars with a professional to make sure that you’re aware of and comfortable with what will happen as a result of the bankruptcy case.
There are signs that point towards the necessity or benefit of filing a Chapter 7 case that include the following:
- You have debts that are more than half of your annual income
- Your income is low or you have no disposable income
- You have a monthly income that’s below the median level for your state
- Your debt can’t be paid off in less than five years, regardless of taking extreme measures of hdsector.
- The debt leads to debilitating stress in your life
What Occurs at the Start of a Chapter 7 Bankruptcy Case?
The first thing that will happen is that the court will put an automatic temporary stay on current debts. This prevents creditors from taking one of several actions that include collecting payments, repossessing your property, and garnishing your wages. The court will take over your property and also appoint a trustee to help with your case.
Your trustee will take a look over your assets and finances and provide oversight to your bankruptcy proceedings. They’ll be in charge of selling any nonexempt property you’re not allowed to keep, then put the funds towards paying back your creditors. They’ll arrange for you to have a meeting with your creditors that they’ll also manage, so you can answer questions regarding your filing.
Some states will allow you to decide to use either the state’s exemption list or the federal exemptions. Fortunately, the majority of Chapter 7 bankruptcy cases are considered to be no asset cases. This means that all the individual’s property is exempt or that there is a valid lien against the property (a legal notice that is attached to the property due to having unpaid debt on it).
After the proceedings (about four to six months after the end of the case), the court should discharge any debts that remain. This means that you won’t have to pay them at all. It’s crucial to note that some debts can’t be discharged, such as court fees, tax debts, and child support. No matter what comes of your case, this is sure to be a relief when you don’t have debt hanging over you.
Why Work with an Experienced Bankruptcy Lawyer
Bankruptcy can be a tricky matter and it’s often an overwhelming one. You don’t want to go into it without some support from a true professional. Your attorney can pinpoint what you need to gather for your case and then make sense of these documents to give you the best possible outcome for your Chapter 7 bankruptcy. Even though it’s not the most positive experience, you’ll gain some relief and peace of mind from the fact that your case is in good hands. Reach out today and find a competent and caring bankruptcy lawyer to assist you.
