Should I file a Chapter 7 bankruptcy?
Chapter 7 is the most common type of bankruptcy in the United States. If you file a Chapter 7 bankruptcy, assets that are not exempted or protected under Pennsylvania or federal guideline limits would be liquidated to pay your creditors. It is at that point that any remaining debts over and above that would be discharged. Chapter 7 can be the first step in starting over.
Qualifying individuals can file for Chapter 7 bankruptcy, but so can businesses, so that they can liquidate assets to cover debts.
About forty days after filing your petition, a meeting with “your creditors” occurs. You will have to attend this meeting and will have to answer questions asked by a trustee appointed by the court.
Chapter 7 may work for you if:
- You own little or no property
- You have an income level that falls below the means threshold
- You have mostly unsecured debt
- You can’t commit to a repayment plan for the next 3 to 5 years.
Benefits of Chapter 7 are
- It is a quick (4-7 month) process
- There is no minimum debt limit.
- Eliminates most of your unsecured debts and some secured debts
- It stops all creditor calls or collection attempts
- Doesn’t require a repayment plan
- Creditors may no longer garnish your wages or demand payment or file lawsuits against you
- It gives you a fresh start for many of your debts
Negatives of Chapter 7 are:
- There is a restriction to filing another Chapter 7 for eight years
- Requires you to liquidate or sell all nonexempt assets to pay back creditors
- Co-signors of your debt could remain liable for the full amount of the debt
- It only temporarily halts foreclosure on your property
- There is a significant amount of paperwork required to start the process.
- Potential tax concerns
- Some debts are non-dischargeable
- Impacts your credit score for up to 10 years.
If you are interested in seeing if you qualify to file bankruptcy, you should get in contact with an experienced bankruptcy attorney at RICK STOCK LAW. We can help you avoid common mistakes made by many as they look to achieve financial freedom.