Is Chapter 7 Bankruptcy Right for You?
Whether or not to file bankruptcy involves several different considerations. If your finances can recover fairly quickly without filing then that is probably better than filing bankruptcy. One of the reasons is because you can only file bankruptcy once every eight years so you want to make sure you wait until you really need the remedy. Many times our clients get behind on their debts as a result of a long-term job loss which is usually out of their control.
A Chapter 7 is a total liquidation of your debt, the goal of which is to provide a fresh start with ones finances. There are income limitations to qualify for a Chapter 7, but the amount of money you are permitted to make and still file bankruptcy is surprisingly high. If you meet with our office we will be able to determine if a Chapter 7 bankruptcy is right for you.
Pros & Cons
The main advantage of a Chapter 7 bankruptcy is that it eliminates almost all of your debts. On the down-side you may have to give up some of your luxury possessions. A bankruptcy can make it difficult to obtain a mortgage until you have several years of positive credit reporting. Some employers also look at your credit as an evaluating factor in making a hiring decision.
On the positive side when you file a bankruptcy it stops all collection actions by creditors via the automatic stay laws. You will be able to keep most of your household possessions and most likely one vehicle for each spouse.
Debt That Remains
If you file for protection under Chapter 7, you should be aware that not all debts are eliminated once the bankruptcy process is complete. Most student loans are not dischargeable in a bankruptcy nor are creditors who are not listed on your bankruptcy petition. Recent federal, state and local tax obligations will also survive the bankruptcy. Additionally, child support, spousal maintenance, government restitution, fines, penalties and court fees will not be discharged in bankruptcy. Obviously, from a more practical standpoint you will need to continue paying certain vendors that provide your power, water, sewer and other necessities required it keep ones home up and running.