All the information you need to make an educated decision
Chapter 7 Bankruptcy Options
Chapter 7 often is what people have in mind when they consider 'bankruptcy'. It is liquidation bankruptcy, the intended result of which is a discharge and forgiveness of debt. It can be utilized both by individuals and businesses, and usually is the preferred filing option for those who meet the eligibility requirements.
Through filing Chapter 7, your property is liquidated and sold in order to pay off as much of your debt as possible. You will be left with enough property to be able to re-start your financial life, and some property such as clothing automatically is "exempt". Any unsecured debts that remain after liquidation generally are discharged, and you no longer are held responsible for their repayment.
In the case that you do not own much property to begin with, you may be considered a "no asset" case and your property subsequently will not be liquidated. It also is possible, in rare cases, to discharge secure debts.
Liquidation bankruptcy results in a discharge of debt so that the filer no longer is liable for repayment. Property of the filer is "liquidated" and then sold, to pay off as much of his or her unsecured debt as possible. Debts that remain after the liquidation generally are discharged.
There are certain unsecured debts that either are very rarely or never discharged in bankruptcy. Federal student loans, tax debts, and spousal or child support are among these obligations.
Chapter 7 is very popular because it does not require that you repay debt. For this reason, however, there are eligibility requirements that many people do not meet. If it is judged that your income is high enough such that you can make some payments, you may not be able to file for Chapter 7. The entire filing and liquidation process generally takes about three to six months.
Bankruptcy vs. credit counseling
Are you thinking the only way out of debt is filing for bankruptcy? Before you do, consider contacting a credit counseling service for help. This article compares credit counseling to filing for bankruptcy.
When debt help is not enough: 3 reasons for filing bankruptcySituations can arise that make paying your bills impossible, or that render you ineligible for participating in debt relief efforts such as credit counseling. When you're enduring any of these circumstances, consulting a bankruptcy attorney can provide information about your rights and the consequences of filing bankruptcy.
Is bankruptcy right for you?Long-term unemployment, health problems and fallen home values can make debt management a nightmare. Here are some tips for deciding if bankruptcy is your best debt management option.
What Happens to Cosigners When You File For Bankruptcy?Bankruptcy is a very powerful financial tool that can affect the lives of those surrounding the debtor. Cosigners of debt should pay special attention as they are often not protected by someone else's bankruptcy.
Your Credit Rights After Bankruptcy: Discharged Debts and Zero BalancesRebuilding your credit should be at the top of your priorities after filing for personal bankruptcy. During this process, keep a close eye on your credit report as items can often be reported incorrectly by the credit reporting agencies. In general, all discharged debts should be reported as zero balances after bankruptcy. Often they are reported incorrectly and can end up hurting your credit more than necessary. To avoid these mistakes, understand your credit rights as a consumer even under the stain of bankruptcy.
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