If you are planning to file for bankruptcy protection, one of the first decisions you must make is what type of case you want to file and whether you qualify to file it. The two most common types of personal bankruptcy cases are Chapter 7 and Chapter 13. You may only be eligible to file one type of bankruptcy. This blog will discuss the advantages of filing a Chapter 7 case. To learn more about filing a Chapter 13, please read our next blog titled “You Need a Plan for your Chapter 13 Filing.”
The Chapter 7 bankruptcy process offers a debtor numerous benefits. Below are a few of the most common reasons why individuals struggling with debt file for debt relief under Chapter 7:
If you are overwhelmed by unsecured debt such as your credit card or medical bills, Chapter 7 allows you to eliminate the majority (if not all) of your unsecured debt. For many debtors, this means canceling thousands of dollars of debt!
Bankruptcy is the most comprehensive means for dealing with debt because it includes all of your creditors and everything that you owe. A typical Chapter 7 filing lasts four to six months, which is a quicker process when compared to a Chapter 13 that lasts three to five years.
A typical Chapter 7 case only lasts several months, which helps keep your attorney’s fees lower. The cost of filing for bankruptcy protection is very affordable when compared to the significant amount of debt you can eliminate.
While all bankruptcy debtors are required to disclose their income, a Chapter 7 trustee is mainly focused on the income a debtor received in the six months preceding the filing. Thus, your future income is usually not considered a part of your Chapter 7 bankruptcy.
One of the most common misunderstandings about Chapter 7 bankruptcy is the incorrect believe that the debtor will lose all of his or her assets. Although Chapter 7 is often referred to as a “liquidation,” there a numerous exemptions provided by bankruptcy law that permits a debtor to protect important assets. For example, your home, vehicle, 401(k) and many other valuable types of property are exempted from being included in your bankruptcy estate. The reality is that a large majority of Chapter 7 debtors keep possession of all of their property.
At The Law Office of Diane Anderson, our lawyer has faced Chapter 7 bankruptcy. She understands the anxiety and fear that accompanies working through this process. But, after coming out on the other side, she started her own law firm and is living a life with less worry and strife. Contact us today to get the help and guidance you need in order to take control of your finances.