What kind of bankruptcy is a Chapter 7 bankruptcy?
A Chapter 7 bankruptcy is also known as a liquidation. This refers to the process
of a trustee gathering and selling a debtor’s nonexempt assets and then using the proceeds to pay back creditors. This is the most common type of bankruptcy.
Why should I choose to file a Chapter 7 bankruptcy?
There are multiple reasons to choose to file a Chapter 7 bankruptcy, with the most common reasons being:
You Need Quick Relief
Chapter 7 bankruptcies can take as little as just a few months to discharge your debts. This allows you to quickly get to a place where you are no longer legally responsible for paying off these debts.
You Are Unable to Repay Debt
A Chapter 13 bankruptcy helps debtors to repay creditors over a three to five year period. If this is something that you cannot afford, a Chapter 7 bankruptcy is likely the better option for you.
The Majority of Your Debt is Dischargeable
If the majority of your debt is dischargeable, a Chapter 7 bankruptcy makes the most sense to free you from your debt. Dischargeable debts often include debts such as credit cards, medical bills, personal loans, and utility bills. Once these debts are discharged, you will no longer be legally required to pay them and creditors will not be allowed to continue collection calls.
Who can file for a Chapter 7 bankruptcy?
Individuals and business entities can file for a Chapter 7 bankruptcy.
What are the eligibility guidelines?
To be eligible for a Chapter 7 bankruptcy, your disposable income (income remaining after taxes and other mandatory payments are made) must be low enough to pass the Chapter 7 Means Test. This test analyzes your income and expenses to see if you fit within the guidelines for a qualified Chapter 7 bankruptcy case. To get a better idea of if you would pass the Chapter 7 Means Test, try out the online Bankruptcy Means Test Calculator.
What debts are not discharged by a Chapter 7 bankruptcy?
Debts from alimony, child support, income taxes, student loans, and fines or penalties for breaking the law will not be discharged by a Chapter 7 bankruptcy. Other debts may be not discharged as well. If you have questions about certain debts that you currently have, I can provide answers with a simple phone call.
How long does it typically take to receive a discharge?
Chapter 7 bankruptcy is commonly liked for its fast pace. It typically only takes three to five months to have your debts discharged.
What is the main advantage of a Chapter 7 bankruptcy?
The main advantage of a Chapter 7 bankruptcy is that it allows you to quickly discharge most of your debt so that you can get a fresh start in life. The sooner you make the move to start your Chapter 7 bankruptcy case, the sooner you can live debt and stress-free.
What are the disadvantages of a Chapter 7 bankruptcy?
The greatest disadvantage to a Chapter 7 bankruptcy is that a trustee (a person with responsibility to handle your property and money) can sell your nonexempt property. This type of bankruptcy also does not provide a way for you to avoid foreclosure on your house or repossession of your car. A Chapter 13 bankruptcy is likely a better option if you are in need of avoiding foreclosure or if you are needing to catch up on missed mortgage or car payments.
If you think Chapter 7 bankruptcy is the right step for you, contact me to get started. I can answer any other questions you may have and can get started on your bankruptcy case in less than ten minutes!