What is Chapter 7 Bankruptcy?
How does Bankruptcy Chapter 7 work and what does it mean?
Which of the following items would you most likely be able to keep in chapter 7 bankruptcy?
Consumers who find themselves swimming in past-due bills may be able to file for Chapter 7 bankruptcy to improve their long-term financial health -- but they should understand the risks involved and determine if they are even eligible to file.
When consumers debts have exceeded their income, they may have the option of filing in a federal court for either Chapter 7 or Chapter 13 bankruptcy, though the route they choose depends on how much they have in the bank, the type of property they own and the income they are pulling in.
Low-income debtors who aren’t holding on to any assets may find Chapter 7 to be their best option to get themselves back on track — it could wipe out certain types of unsecured debt, except for child support obligations, tax bills or student loan payments.
According to numbers collected by the Administrative Office of the US Courts, in the year-long period ending in March 2020, about 62 percent of individuals and businesses in bankruptcy proceedings filed under Chapter 7.
But debtors who file for bankruptcy are subject to a stringent means test to count up their disposable income and their monthly expenses to make sure they qualify. And the bankruptcy could linger on a consumer’s credit report for 10 years, which may hurt their chances of getting new loans down the road.
With help from the attorneys at Consumer Attorneys, consumers may be able to decide if filing for bankruptcy under Chapter 7 is their best option — and if so, they can make sure their clients are taking the best steps to protect their financial security.
Considering Chapter 7
Chapter 7 tends to be the simplest way for consumers to resolve their debts — many are able to resolve their cases in a matter of months and hold on to their property when it’s all over.
Some property is exempt from getting taken in a Chapter 7 proceeding — courts cannot force debtors to sell their clothes, their automobiles or their household appliances and furniture, nor can they seize money paid out through public assistance programs.
But courts can force debtors in Chapter 7 proceedings to sell second cars or homes, valuable collections, money in a bank account over a certain amount and stocks and other investments.
How We Can Help
Debtors are already facing dire financial straits, and thus many decide to go it alone and file for bankruptcy pro se — the legal term for filing a court proceeding without first hiring a lawyer. The federal paperwork required in bankruptcy cases can be extremely detailed and oftentimes difficult to complete, which may put debtors at risk of paying debts that could be cleared through a Chapter 7 proceeding. But the experienced team at Consumer Attorneys can work with consumers to ensure that bankruptcy is in their best interest — and keep the bill collectors off their backs while they help them get best results out of an oftentimes stressful and complex process.
Filing for bankruptcy has several negative effects your credit score
Unlike a Chapter 7 Bankruptcy, a Chapter 13 Bankruptcy will provide an opportunity to get caught up on payments on a house or car.
At its heart, a Chapter 13 Bankruptcy is the reorganization of an individual’s secured and unsecured debts.