Chapter 7 Bankruptcy Facts to Know
Posted by Bella Flow on March 22nd, 2020
If you have more debt than you are able to repay, you may consider filing for bankruptcy. However, you should know that this should never be a rash decision. When filing for Chapter 7 bankruptcy, one should take the time to consider their options and determine if filing for this is the correct path for them. Here are some facts that you should know before you make the decision to file for Chapter 7 bankruptcy or not.
Chapter 7 bankruptcy is also known as a liquidation or straight bankruptcy. Debtors are generally allowed to discharge most of their debts in order to have a clean slate. These debts often include medical bills and credit cards. However, you are often required to sell a good portion of your assets in order to pay for your debts.
Not all debts can be discharged in Chapter 7 bankruptcy. Student loans are one of these things, as is a real estate lien. Alimony and child support are included in these non-discharged debts. Taxes are not allowed to be discharged either. And you should note that if a creditor disagrees with an item being discharged, and the court sides with them, then you will be required to pay back those debts.
How much you make can also determine what type of bankruptcy you are allowed to file for. There are times when a person makes too much money to allow them to file for Chapter 7 bankruptcy. In cases like these, the person will need to file for Chapter 13 bankruptcy if they decide bankruptcy is the best option for them. Every state has a different income requirement.
If you hire a lawyer, you will be required to pay for those fees. These fees can not be added to your bankruptcy in most cases. Court costs will also need to be paid. Chapter 7 bankruptcy generally costs less to file than Chapter 13 as Chapter 7 does not take as much time.
Chapter 7 bankruptcy will be on your credit report for ten years. While this may ruin your credit for a while, those that file for Chapter 7 find much relief as they are able to structure their finances better after wiping the slate clean. Credit counseling will help to keep you on track so, in the future, you do not go back to your old ways and wrack up debt.
Bankruptcy can be a confusing thing to go through. There is a lot of paperwork to fill out that is not always straightforward. Mistakes made in this could end up costing you more than you desire. This is why it is essential to have a bankruptcy lawyer to handle your case for you.
Generally, your case will last anywhere from four to six months. In order for the courts to work with any debtor, they will need to be upfront and honest about the debts they have. Otherwise, the court will say they are not entitled to be discharged for the debts they have.
In the US, Chapter 7 bankruptcy is the most common type. If you have decided that filing for bankruptcy is the right decision for you, consider contacting a Chapter 7 bankruptcy attorney. The lawyer will be able to assist you in filling out the correct paperwork and can make the entire process much simpler.
