In a Hurry? Dial +18-503-850-342 Now!Chapter 7 bankruptcy can be an invaluable way to relieve you of multiple debts, such as credit card, student loan, or medical obligations. Over 39 million Americans are estimated to have filed bankruptcy.
When contemplating Chapter 7 bankruptcy given my income and assets, will it ever be possible for me to pay back all my debts? If the answer is “no”, ask yourself a question, should I file bankruptcy Chapter 7?
What Is Chapter 7 Bankruptcy?
Filing for Chapter 7 bankruptcy provides the court with information on your income and expenditures as well as assets owned or owed to the debtor. Submit them along with recent tax returns (and, if employed) and pay stubs if applicable directly to the Bankruptcy Court for review and filing.
A bankruptcy trustee will review your documents and forms before conducting your 341 Meeting of Creditors where basic questions about finances will be asked of you.
After filing bankruptcy, your discharge petition should be approved by the Bankruptcy Court and any eligible debts will have been erased – provided all forms were completed accurately and all necessary steps taken.
What Debts Qualify for Discharge Through Bankruptcy Filing?
Chapter 7 bankruptcy offers relief from:
- Credit Card Debt
- Medical Bills
- Car Loan Deficiencies
- Payday/Personal loans
- Credit Cards and Debt Collection Agencies
- Utility Bills
- Most federal student loan
Automatic Stay is activated upon filing bankruptcy and temporarily stops collection efforts against the debts that you owe. However, chapter 7 bankruptcy cannot oust certain debts such as Child Support and Alimony payments that cannot be legally dismissed as debts that must be erased before declaring bankruptcy can begin.
Your taxes, fines, and past-due tax debts could have amassed.
Secured Debts refer to debts associated with specific properties, like your mortgage or car loan. To retain them, these obligations must continue being paid; ensure you stay current before filing bankruptcy; Chapter 7 can allow debt elimination in return for giving up property ownership.
Does Bankruptcy Erase Student Loan Debt?
Many believe student loan debt cannot be discharged through bankruptcy; this is far from accurate. Beginning in late 2022, the federal government will begin collecting student loan debt, with Justice and Education both changing their bankruptcy guidelines to make discharging federal loan debt easier – great news for student loan borrowers struggling to repay them as most student debt in America comes from federal student lending sources.
Private student loans may also be dischargeable through bankruptcy; however, their discharge process can be more complex. You will need to file an adversary proceeding, similar to a court trial, for these types of debt. If you’re wondering whether should I file bankruptcy Chapter 7? It’s important to note that many experts advise hiring an attorney specifically experienced with Chapter 7 bankruptcy to facilitate the discharge of private student loans.
In a Hurry? Dial +18-503-850-342 Now!Who Can File Chapter 7 Bankruptcy and When?
Not everyone qualifies to file bankruptcy under Chapter 7, although those eligible should consider doing so.
Most individuals earning less than the median household income in their state qualify to file for bankruptcy according to bankruptcy law and can submit evidence that meets the means test for doing so; this test measures their average monthly income over six months before a bankruptcy filing.
Chapter 7 bankruptcy could be right for you if you do not work and earn less than minimum wage, even if the means test shows otherwise. People looking for new beginnings often fall into three categories when considering bankruptcy:
- Who Should Declare Chapter 7 Bankruptcy Now
- Wait Before Filing
- Chapter 7 Bankruptcy May Not Be For Everyone
When Should Chapter 7 Bankruptcy Be Filed?
Below are a few indicators that it might be time for bankruptcy: If your dischargeable debt exceeds $10,000. When filing bankruptcy:
- Your credit score (less than 600).
- Having no expensive property.
- Not being able to keep up with payments every month
- Are You Being Threatened with Wage Garnishment or Litigation for Debt Collection
Ideally, this means test is something to take seriously as long as the median income in your state falls under $50,000/yr and repayment will not happen within 5 Years
If you recognize these situations, now may be the ideal time for declaring bankruptcy.
Should I Delay Filing Bankruptcy?
Waiting can make filing for Chapter 7 bankruptcy simpler. For example, if you find yourself asking Should I file bankruptcy Chapter 7? Waiting can make the filing easier if your daily expenses depend heavily on credit cards or major purchases have occurred in the last six months. Both indicators that filing may help relieve some of the stressors associated with debt management and bankruptcy filing processes.
It would be prudent to postpone filing bankruptcy if you transferred or sold property within the past year to friends and relatives; these activities must be disclosed in your bankruptcy paperwork, and your trustee could ask about them during an examination of your financial affairs.
It may be beneficial to wait to file bankruptcy until after completing or anticipating the outcome of a court case or personal injury settlement has occurred. Many people delay Chapter 7 bankruptcy until after receiving such compensation has been resolved.
If your finances worsen over the coming months or years, filing Chapter 7 bankruptcy might be wise to postpone for now. A single petition every eight years is permitted – so if additional debt arises it would make more sense to hold off than file right away.
Can I Keep My Property If Filing for Chapter 7 Bankruptcy?
Under bankruptcy law, exemptions allow certain assets like money, clothes, furniture, and cars up to an agreed-upon value to remain yours after filing Chapter 7.
Your state determines which exemptions you can utilize; wildcard exclusions are available in many states to let you retain property worth less than certain thresholds and protect an extra $13,950 without using a homestead exemption. By filing bankruptcy under federal exclusions instead, using wildcard exemption can save up to $1475 when used alongside federal bankruptcy exclusions; alternatively, homestead protection can offer even more savings of this nature – saving an extra 1475 as you avoid homestead protection costs!
If the value of your property exceeds exemption limits, Chapter 7 bankruptcy often referred to as liquidation bankruptcy will sell it off and pay your creditors directly from this sale. Although liquidation occurs rarely.
How Long Does Chapter 7 Bankruptcy Typically Last?
Doing Chapter 7 bankruptcy takes about 7-14 days; meetings with trustees typically happen one or two months post-filing.
Assuming all goes according to plan, your trustee will send out a letter approximately two to three weeks post-meeting confirming your debt has been discharged – making the duration between beginning Chapter 7 bankruptcy proceedings and receiving your discharged letter approximately 3 – 5 months.
The Bottom Line!
Should I file bankruptcy Chapter 7? Your decision to file Chapter 7 bankruptcy depends on several factors, including your current financial standing and any available solutions to reduce debt relief options. In addition, consider timing as you research available solutions by attending credit counseling classes or talking with credit counseling services representatives. To further learn about all available choices available to you take an educational credit counseling class!
Consultation with an experienced bankruptcy lawyer who can provide invaluable insight into available options and inform decisions, helping debtors navigate the process more easily while protecting their financial future. Contact Bruner Wright now!
Schedule a free consultation with Bruner Wright now for quick action!
In a Hurry? Dial +18-503-850-342 Now!