While there are several reasons why someone might need to file for Chapter 7 bankruptcy—including the bills incurred after a major medical emergency, or some other unimaginable financial hardship—if you’re considering bankruptcy as a solution for debt, you’re not alone. Filing for bankruptcy, however, isn’t always the most ideal solution.
Read on for some more info about the advantages of Chapter 7 bankruptcy, and see if it’s the right financial choice for you:
Chapter 7 Basics
- A typical Chapter 7 bankruptcy case takes between three and six months to complete.
- Unlike Chapter 13 bankruptcy, you won’t have to worry about a three to five-year repayment plan.
- Many of your debts will be wiped clean, allowing you to get a fresh start: but not all of your debts will be cleared. Ask one of our associates about the difference between dischargeable and non-dischargeable debts.
- You can most likely keep your home, if you’re up to date on your mortgage payments—but if you have more equity in your home than is allowed by bankruptcy law, the trustee will ask for the difference.
Who Should File for Chapter 7 Bankruptcy?
Filing for bankruptcy is a tough decision: you might be struggling with making the decision on whether or not to file—even if it’s the right choice for you—because of a negative stigma that you’ve associated with the process. Somehow, because you’re in dire financial straits, you’ve decided that it’s all your fault, and that you don’t deserve a second chance. But, when you’ve gone through an extreme financial hardship—like a cancer diagnosis and subsequent treatment, or a debilitating job loss—filing means that you’re attempting to put yourself in the way of your own success in the future. Chapter 7 can protect you from wage garnishments, can stop a foreclosure on your home, and can get those debt collectors to stop calling you. Filers who’d benefit most from a Chapter 7 bankruptcy include those who:
- own little property
- have credit card balances, medical bills, and personal loans
- have an income that does not exceed the state’s median for their prescribed family size. You’ll take the “means test” in order to find out whether or not your income qualifies you for Chapter 7. If your income is below the average income for a family of the same size in your state, you’ll automatically qualify.
In the end, filing for Chapter 7 bankruptcy can help you wipe out credit card balances, medical bills, and other qualifying debts so you can get a fresh financial start. Although it, of course, comes with the negative repercussion of initially hurting your credit score, with smart financial planning—and the dedication to rebuilding your life from the ground up—even that issue can be dealt with as you continue to forge ahead. You can start rebuilding your credit immediately after your case ends, and in time, rebuild your credit to the best it’s ever been. If you have any further questions about what’s best for you personally, please reach out to our associates for the help you need to shoulder your financial burden.