Chapter 7 bankruptcy is like a “do-over” button that allows you to start over. One moment you are adrift in a financial storm, drowning in credit card debt or other unsecured debt. The next moment you hit the “do-over” button by filing a Chapter 7 bankruptcy and you are on your way to a debt-free fresh start. Chapter 7 bankruptcy will eliminate credit card debt, medical debt, garnishments, loans, debts from repossessions and even some tax debts.
Typically, you can keep your house and your car, as long as you continue making regular payments.
By law, all legal actions against you must cease once a Chapter 7 bankruptcy has been filed. Creditors cannot initiate or continue any lawsuits, wage garnishments, or even telephone calls demanding payments.
You may qualify for Chapter 7 bankruptcy if your household income is below the state’s median level or you cannot cover your monthly expenses. If your income is below the state’s median income for a household of its size, you can be eligible for Chapter 7 debt discharge. If, after each month, you have money leftover (also referred to as disposable income), Chapter 7 may not be appropriate for you. It is presumed that you would use this leftover money to pay your existing obligations. Chapter 7 is intended for those who cannot satisfy their monthly obligations resulting in further accumulation of debt. If you do not have much property, outside of a home and car, Chapter 7 may prove to be immensely beneficial, as the law allows you to keep some property that is necessary to building a financially stable future.
The law recognizes that certain property is essential to achieve a fresh start. In a Chapter 7 bankruptcy, you may retain all exempt property that will help you start over. Exempt property is that which cannot be sold to satisfy your debts. If an exemption applies, you can keep your property. Property that is commonly exempt and protected includes your home, automobile, household goods, life insurance policies, and retirement plans, among others.
However, nonexempt property can be sold and used to satisfy your debts to creditors. The proceeds from the sale of nonexempt property do not need to meet the amount of your indebtedness. Your nonexempt property will be sold, the proceeds will be allocated to creditors, and if there is still debt remaining, it will be forgiven and discharged.
It is important to note that not all debts can be discharged through bankruptcy. Certain debts such as student loans, income tax deficiencies, and family support obligations cannot be discharged. These types of debt will remain with you after a bankruptcy proceeding, until they are paid off.
By law, all legal actions against you must cease once a Chapter 7 bankruptcy has been filed. Creditors cannot initiate or continue any lawsuits, wage garnishments, or even telephone calls demanding payments.
If you are tired of harassing phone calls, worrying about your finances and the future, filing a Chapter 7 bankruptcy may be the most effective way to protect yourself from creditor harassment and start anew. Call us today to schedule a free consultation.
