Chapter 7 Bankruptcy
Chapter 7 bankruptcy is a form of bankruptcy that discharges unsecured debt. This debt includes personal loans, credit card debt and medical bills. Most people will file for bankruptcy when their debts exceed their means. Different states have different income limits that a person must be under to qualify. In addition, a person must have a certain amount of debt. Chapter 7 bankruptcy is common but also complicated. Before you begin the process, you should ask two questions of yourself.
Are You Informed?
How much do you know about bankruptcy? Do have the basics? Do you know anyone who has filed for Chapter 7? Learning about Chapter 7 can be a long process. Unfortunately, there are also myths that you need to take into consideration.
One major myth is that a person will lose everything. In some cases, a debtor will not give up any of his her or possessions. The law provides people with an allowance for all assets necessary for day-to-day living. You can keep your house, your car, your computers and any other equipment that you need. These are exemptions. In addition, most creditors are not interested in your possessions. Another myth is that you can erase all of your debt. This isn’t true. You will not be able to get out of tax obligations, child support, student loans or alimony.
A myth that tends to keep people away from bankruptcy is the myth that it will ruin your financial future. This is not true. You may have issues obtaining credit after a bankruptcy and you will have to deal with higher interest rates for the 10 years that bankruptcy remains on your report. However, this is not the end. Many people take a credit hit in the short-term but bounce back and prosper afterward.
Are You Prepared?
In order to prepare for bankruptcy, there are a few different steps for you to follow. First of all, do not pay any creditors more than normal. Make your routine payments but do not benefit any creditors above the other. In addition, do not add any new debt or make any unusual transactions. Next, you want to stay honest and use your common sense. Be open during your case for the best results.
If you’re preparing to file for bankruptcy, talk with a chapter 7 bankruptcy lawyer to figure out your options. With a lawyer at your side, you will be the most prepared to file for bankruptcy. Likewise, your lawyer can help you with preparations and provide you with the necessary knowledge.