Chapter 7 Bankruptcy Is Your Legal Right
"Liquidation" is often a very misinterpreted term. A Chapter 7 bankruptcy case is referred to as liquidation because your non-exempt assets are converted to cash, or liquidated, to pay off your outstanding debt. However, many people who file for Chapter 7 bankruptcy face no actual liquidation, since most or all of the assets will be exempt.
To file bankruptcy under Chapter 7, it is necessary to take a means test and make sure you qualify.
Chapter 7 bankruptcy may be the right choice if:
- You have low or no income
- You have little or no money remaining after paying necessary living expenses each month
- You rent or have little equity in your home
- You have very few or no assets besides your furniture, clothing and other necessities
- You haven't filed in the past eight years (you can only file once in eight years)
You must receive a briefing from a credit counseling agency before filing your bankruptcy case
The law requires that you get a briefing from a certified credit counseling agency before you file a bankruptcy petition. Failure to obtain this briefing before filing can cause your case to be THROWN OUT! The agency will educate you on financial management and how to do a budget analysis, and will provide you with possible alternatives to bankruptcy. Your attorney can refer you to a certified credit counseling agency.
An experienced Chapter 7 bankruptcy attorney may help you
It is possible to file Chapter 7 bankruptcy without the aid of a bankruptcy attorney. However, the law is complicated and your future is on the line. A dedicated bankruptcy attorney who knows the laws and your state's exemptions can guided you through the complex process and lay out all of your options.
Get protection from creditors when you file for bankruptcy
When do the juggling of bills, sleepless nights and creditor harassment finally stop? After getting a bankruptcy attorney, the end will be in sight. The first step is to complete your credit counseling session and give your bankruptcy lawyer all the necessary information.
After your bankruptcy attorney reviews your condition, he will prepare a bankruptcy petition along with other related forms and schedules. This petition will have you list personal information like your income, assets, expenses and debts. Then you will list any of your possible exemptions- laws that prevent your creditors from taking property away from you.
Next, your attorney will take the petition to a bankruptcy court and the court will appoint a trustee to your case. In most cases an "Automatic Stay" is entered, which is a court order that forbids most of your creditors from taking further action against you outside the bankruptcy court. An automatic stay is designed to:
- End most of the calls and bills from creditors
- Protect much of your property from seizure during your bankruptcy case
- Forbid most creditor lawsuits against you
- Avoid foreclosure of your home
- Eliminate wage garnishments
- Stop the repossession of your vehicle
In order to receive your bankruptcy discharge you must comply with all rules
It is crucial to follow your bankruptcy attorney's advice and DO NOT:
- Try to conceal your property
- Get rid of your financial records
- Disobey any court order
- Make massive, last-minute charges on your credit cards
Chapter 7 bankruptcy allows you to protect your property from creditors
An up side to Chapter 7 bankruptcy is the fact that certain property in untouchable by creditors. Exemptions do vary according to the state, but typically include your primary home, tools, your automobile and many other types of property.
Often your exemptions will protect all of your assets, but if that is not the case, the trustee that the court gave you will begin to liquidate your assets and pay your creditors. Unless your trustee can make enough money to make a significant payment to the creditor, generally they will not liquidate. However if the creditors are paid or a settlement is reached, your debts are freed.
Bankruptcy can help you get rid of many debts
If a debt is unsecured, meaning no collateral backing it up, then it can normally be discharged in a Chapter 7 bankruptcy case. Examples of unsecured debt include:
- Credit card debt
- Medical bills
- Many forms of personal loans
- Judgments resulting from automobile accidents
- Shortages on repossessed automobiles
- Some older tax debts
- Payday loans
- Garnishments
Keep your assets by reaffirming your debt in bankruptcy
Although a bankruptcy lawyer can help you clear your unsecured debts, secured debts do not simply vanish. As you file bankruptcy, you may be able to discuss the possibility of a reaffirmation agreement with your creditors. This basically means that you have the right to keep the property as long as you agree to keep making payments.
Bankruptcy cannot eliminate all debt
Even bankruptcy cannot erase all your financial troubles. You will still be liable for non-dischargeable debts like child support, some taxes and most student loans.
If you have many non-dischargeable debts, you may want to consider Chapter 13 bankruptcy. Cases can be converted from Chapter 7 bankruptcy to Chapter 13 bankruptcy cases.
The Final Step
Before you get the discharge, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 requires you to complete a course about personal financial management. Your bankruptcy lawyer can refer you to the appropriate class.
Wipe your slate clean with Chapter 7 bankruptcy
Making the choice to file bankruptcy is something that is not, and should not be, taken lightly. However, it is often the only logical way out of financial problems for many people. Chapter 7 bankruptcy can provide you with the protection you need against creditor harassment. Get started today by calling Total Bankruptcy toll-free at (877) 349-1309 and speak with a qualified sponsoring bankruptcy lawyer. Or feel free to use our secure online case evaluation form. A bankruptcy attorney in your area will contact you for a free, no-obligation consultation.