Filing Chapter 7 is something you need to consider when you can’t repay your debt — you’re struggling to make ends meet. Because a personal bankruptcy does have serious implications to your life, it is important that you weigh other options as well. Is this something that you need to do or is this something that you can avoid?
For that reason, it’s a good idea to contact your bankruptcy attorney to help walk you through understanding if Chapter 7 is right for you. He or she will help you to understand new bankruptcy laws; whether you need to file bankruptcy chapter 7 or you don’t need to do so.
When To File Chapter 7 Bankruptcy
There will be times when filing Chapter 7 is a good thing. For example, if you have extraordinary medical bills you can’t pay them off — or you have been injured and don’t have a means to pay them off — this may be a good time to file.
Do you have a huge credit card debt or real estate debt? If you have assets, you will need to sell them off to repay the debt that you owe. Your attorney will work through this process with you about different allowances that can be kept and that can not.
Before you consider filing bankruptcy look at what you owe, then factor in the interest that you would be paying on that amount to decide how long you should repay your debt. If the principal and interest amount you need to pay along the life of the loan very significant then it may be far too costly in your financial future to not file Chapter 7 Bankruptcy.
Do You Qualify For Filing Chapter 7?
The person to file chapter 7 should be someone who has little or no assets. Do you have valuable assets? If so, you will need to relinquish anything that is of value because your creditors can stake claim on those goods.
Each state regulates what you can and can’t keep when filing. Some states allow you to keep the equity that you have in your home. In others, you will have to turn over your household goods that are in excess of a certain dollar amount.
In some areas, you will be able to keep your home and your car if you are current on your payments — if your lenders agree to continue with the payment plan. However, there are also cases when you can lose them to your bankruptcy filing for paying off the money you owe to your creditors.
The Process of Filing Chapter 7 Bankruptcy
Finding out who you owe money to and how much you owe them is your first step. One way to check on what you owe is to pull your own credit report from the major credit bureaus. Even though it may not list everyone who you owe money to this will give you a good idea of.
In this type of bankruptcy filing, your debts are discharged. All debts that are filed under this and are approved for discharge will be debts you are no longer responsible for. This type of bankruptcy filing is best for those that don’t have assets or have assets that are not valuable enough for the creditors to file against.
The process of filing bankruptcy can take any place from three months up to five or six months before your debts are finally discharged. During this time, you can’t apply for new credit or spend on your old credit. In addition, there are restrictions on how often you can file Chapter 7.
So you should talk to your attorney to discuss whether filing chapter 7 bankruptcy is the right choice for your financial future or not. With new bankruptcy laws in place, it may or may not be something that you can do at all.