Could Chapter 7 Bankruptcy Help You Get Out of Debt?
Lately, it feels like a lot of us are in the financial trenches.
Times are tough and many of us are filing bankruptcy or thinking about it.
Chapter 7 bankruptcy has helped millions of Americans get out of debt–but it’s not always the right choice.
Read on to learn more about whether Chapter 7 bankruptcy may be able to help you.
1. You own luxury items you aren’t willing to part with.
Chapter 7 bankruptcy is sometimes referred to as “liquidation.” This is because a bankruptcy trustee can sell (or liquidate) any of a filer’s possessions that aren’t exempt (or protected) under state law. In most circumstances, states allow a petitioner to keep essential items, but if you own fancy cars, lots of valuable jewelry and other non-essential luxury items, your trustee could sell these items to pay off your creditors.
2. You only wish to discharge specific debts.
If you are attempting to be excused from specific debts (such as back child support, alimony, taxes or student loans), Chapter 7 bankruptcy might not be the right choice for you. Some debts are considered non-dischargeable under Chapter 7 bankruptcy, which means that the bankruptcy court cannot forgive them.
3. You have money on the way.
If you are due to receive a significant amount of money in the near future (from a lawsuit settlement, insurance policy, inheritance, etc.), Chapter7 might put those assets at risk. A Chapter 7 bankruptcy lawyer can help you determine if these anticipated assets can be exempted.
4. You own property together with family members.
The laws concerning “tenancy in common” (jointly-owned property) vary depending on where you live. However, in certain cases, a bankruptcy filing can sometimes affect the other owners in adverse ways.
5. Your income is significantly greater than the median income for a family of your size in your home state.
In order to be eligible to file for Chapter 7 protection, you must pass the Chapter 7 means test, which compares your income to the median income in your state. If you make a great deal more than the median family of your size, you may not be able to qualify for Chapter 7 protection. But even if you surpass your state’s median income level, you may still be able to file Chapter 7 bankruptcy under a different test. If this is the case for you, talk with a bankruptcy lawyer today.
6. You can’t afford an the attorney’s fees required to file. Because of certain changes to bankruptcy law, attorney’s fees, administrative fees, and new requirements cost bankruptcy petitioners more. If you simply cannot afford the costs of filing a Chapter 7 petition, it may not be the solution for you.
Don’t Qualify for Chapter 7 Bankruptcy? Learn about Chapter 13 Bankruptcy
If you don’t qualify to file Chapter 7, and you have a regular source of income, you may benefit more from a Chapter 13 bankruptcy filing.
Keep in mind, bankruptcy of any variety is a significant undertaking, and you should take the time to clearly explore your options beforehand.
Don’t hesitate to contact an attorney who can help you examine your situation–just plug in your ZIP code above to connect to a Chapter 7 bankruptcy lawyer for free.