Chapter 7 Bankruptcy
Chapter 7 Bankruptcy is going to be geared more towards individuals. Anyone living in the US is able to file a Chapter 7 Bankruptcy. This form of bankruptcy is consists of a complete and total liquidation of all debt. This is going to wipe out all debt you have remaining on your credit report. You are wiping out your debt in order to start over with a clean slate. You will have the bankruptcy on your credit report for 10 years and companies who check your credit are going to be able to see that you did in fact file for a bankruptcy. However, if you are thinking about filing for a bankruptcy, your credit score is probably not top notch anyway.
How the Process Works
When you are getting started with a Chapter 7 Bankruptcy, individuals have a chance to wipe out all of their debt completely and begin with a fresh start. These days, it can be difficult to make a decision to file for a Chapter 7 bankruptcy since your credit is affected. The key factor to remember is that there are a number of benefits that come along with filing bankruptcy, and these benefits often outweigh the drawbacks. Unsecured debt can consist of credit cards or medical bills and you will find that going through this process can take an average of 4-6 months. You should know ahead of time that there is a fee for filing bankruptcy and you will also incur the expense of hiring a bankruptcy attorney. Before you are able to continue with filing, you are going to be mandated to go through credit counseling with a specific agency that has been approved by the US Trustee. You will also need to complete a debt education class as well. Even though you are going to be permitted to hold on to certain assets there may also be some that are going to be sold to help repay your debts.
You need to be aware that not all of your debt is going to be discharged with this type of bankruptcy. Mortgages are usually going to last through a bankruptcy and therefore you will still owe this, and you will also be able to keep the home if you can keep up with the mortgage. If you want to get rid of it, then you may want to consider selling it. However, even if you are selling it there may be a foreclosure set on it if you are behind on your monthly payments. In addition, child support, spousal support, and back taxes are not going to be discharged. Also any judgments that are less than 3 yrs old cannot be discharged. Student loans are usually not discharged either, unless there are some serious hardships. These hardships are generally difficult to prove and this prevents the student loans from being discharged.
Who Files for a Chapter 7 Bankruptcy?
Individuals are typically the primary ones who file for this type of bankruptcy. This process can sometimes be difficult. In fact, in the year 2005 a law was passed by Congress called the Bankruptcy Abuse Prevention Act which was set in place to ensure that not every person would be eligible and allowed to file for this if they were ever able to get all of their debt paid off. Filing for a bankruptcy can be difficult and that is why most cases have the aid of an attorney that has experience to help you get it done right the first time and avoid any stumbling blocks along the way.
