Chapter 7 Bankruptcy - An Overview

Chapter 7 Bankruptcy - An Overview

Chapter 7 Bankruptcy - An Overview

Chapter 7 bankruptcy is one of the more straightforward ways of filing bankruptcy available to individuals with a significant amount of debt. Chapter 7 bankruptcy involves the debtor liquidating their assets to satisfy their debts. This is a simple solution, but can be emotionally troublesome. If possible, individuals should look into different forms of bankruptcy in order to keep their home and belongings. Where possible, individuals should investigate the possibility of filing bankruptcy under the Chapter 13 heading as that would allow them to keep their property and pay off debts through a structured payment plan. Business owners facing bankruptcy should attempt to file under the Chapter 11 statutes which allow them to similarly pay off debt through a repayment plan. Barring the availability of these options, it is important to know what to expect from a Chapter 7 filing.

Are You Eligible?

In order to file for Chapter 7 bankruptcy, an individual's income must be below the average income for the area. If the debtor fails to meet this condition, a means test is then assessed to see if they qualify in that way. This assessment will be done by the debtor's bankruptcy attorney as part of their work together. Additionally, Chapter 7 bankruptcy does not absolve the individual of all debts, including those incurred by taxes, student loans, family law matters, or financial obligations to the court.

"I'm Afraid I'll Lose Everything"

Many debtors are reluctant to file for Chapter 7 bankruptcy for fear of losing all their property. Although this is a very real fear, it's not the case that debtors lose everything they've worked for in Chapter 7 bankruptcy. Many items are excluded from the liquidation process, including cars and homes that are deemed essential the debtors ability to earn a living.

Advantages of Chapter 7 Bankruptcy

Aside from keeping the debtors house and car safe from creditors, Chapter 7 bankruptcy has a few other advantages over the other types of bankruptcy. First, the entire process under Chapter 7 will take about 5 months on average, while a Chapter 13 filing can take up to 5 years to finish. Filing bankruptcy also protects debtors from creditors' phone calls and other actions they take to collect on the debt. Finally, filing is relatively inexpensive. Costs vary, but they are usually much less than the amount the debtor will continue to pay in interest with high balances on the debt.

POST COMMENT

How To Qualify For A Loan In Toronto After A Bankruptcy? Extended Beach Bankruptcy Attorney Means Test For Bankruptcy Common Myths About Bankruptcy Fresno Chapter 7 Bankruptcy - The Chance To Start From Scratch Bankruptcy Changes For Lawyers Choosing Your Riverside Bankruptcy Attorney Questions For Your Riverside Bankruptcy Attorney Local Changes, Economic Factors And Bankruptcy Overwhelming Facts Of Filing For Bankruptcy Cons of Filing For Bankruptcy Emotional Toll of Bankruptcy Filing Personal Bankruptcy In Portland