Chapter 7 Bankruptcy is one way of eliminating unsecured debt when your monthly payments can no longer be met. A discharge could take care of credit card bills, personal unsecured loans, medical bills, and a variety of other unsecured debt you may have lingering.
“The most common type of bankruptcy is Chapter 7. Often referred to as liquidation bankruptcy, Chapter 7 bankruptcy is used by those who don’t have a lot of property or other assets,” Bankruptcy lawyer David M. Offen explained.
It can be hard to admit that you need help getting out of debt, or that you can’t do it on your own. However, that is the reason why the government made bankruptcy laws to protect both creditors and debtors.
If you have an alarming amount of debt, you should start facing the cold hard financial facts. Trying to ignore the phone calls and stacks of unpaid bills will never make financial problems go away.
Table of Contents
3 Common Bankruptcy Questions
- What Debts Are Exempt from Chapter 7 Bankruptcy?
A category of debt that is classified as non-dischargeable are student loans, child support, and types of tax-related debt, all exempt from Chapter 7 bankruptcy.For questions involving a specific type of debt it’s best to consult a Chapter 7 specialized lawyer.
- Why Is Chapter 7 Bankruptcy also Called Liquidation?
This is because a bankruptcy trustee can liquidate your unprotected assets to pay some of your bills. However, there are state by state exemptions that may have stipulations regarding what assets are protected and/or unprotected.
- How Long Does the Process Take?
It normally takes three months to four months from the time you file bankruptcy to the end. Your lawyer can go over services and advise you with detailed explanations of the process.
Are There Benefits of Chapter 7 Bankruptcy?
Most people are surprised that this type of bankruptcy has benefits. Debt can be wiped from your life and you can get rid of collection agencies that keep hounding you. The following are a few benefits to Chapter 7 bankruptcy.
- Eliminate debt: Going the Chapter 7 route may put you back in control of your financial future. The money that you owe on credit cards, personal loans, and other kinds of unsecured debts can be taken care of by a bankruptcy discharge.
- Helping with the crippling medical bills: People who have experienced illnesses or injuries and found themselves being buried in bills, despite health insurance,can file for Chapter 7 bankruptcy to get out of debt. A recent study from Harvard Law School found that that over 50 percent of bankruptcies are connected to illnesses. And 75 percent of those people who file because of medical bills actually have health insurance.
- Stop the harassing behavior from creditors and collection agencies: Chapter 7 stops collectors harassing you or using unfair practices while trying to collect a debt. They should follow the written request from you to stop any further contact. All of this can be done even before you file.
- Bankruptcy is not a reason to lose your job: What is the meaning of bankruptcy for your work status? A debtor may fear losing a job if Chapter 7 bankruptcy filing has been found out at work. However, you cannot be fired from your job because of bankruptcy. This is important to remember.
- Repayment is not necessary: If the new bankruptcy laws are complied with, you are not required to give a monthly payment to your creditors. This is definitely an advantage if you currently don’t have a job or you have very little income coming in monthly.
Get The Facts About Bankruptcy
For you to determine where exactly you are financially, all your liquid assets must be inventoried. Don’t forget to incorporate stocks, retirement funds, bonds, vehicles, real estate, college savings accounts, and funds that are not in banks. Develop a rough estimate for every asset and debt.
Once you do that, you can collect and add all your bills and credit statements. If the total value of your assets is less than the amount of debt you owe, declaring bankruptcy could be a way out of your current unpleasant financial situation.
You shouldn‘t approach bankruptcy casually either. Even though there are financial benefits, filing Chapter 7 means having a small mark on your credit for up to 10 years. Bankruptcy is certainly not a simple and easy method to satisfy all debts, but it can help you decrease stress and get back on financial track.
About Carson Derrow
I wanted to thank you for helping me understand chapter 7 bankruptcy more. It’s good to know that this could take about three to four months from the time you file. It sounds important to file quickly especially if you need to go through the process as fast as possible.