Deciding to declare bankruptcy may be one of the most difficult decisions that you will ever be faced with. It will negatively affect your credit in the future, but it has the potential to improve your quality of life and allow you to get back on the right track financially.
Chapter 7 bankruptcy is the most common type of personal bankruptcy in the United States. It allows you to eliminate most types of debt to allow you to have a clean slate and start over. It does not involve the filing of a plan of repayment.
While many of the facts that surround the filing of bankruptcy may seem daunting and hard to swallow at first, you must keep your future financial security in mind as your light at the end of the tunnel. It is important that you understand the pros and cons of filing for bankruptcy as it can often be very complex when it comes to property, child support, assets, and student loan debt. It may get harder before it gets easier, but it will get easier.
Here are 10 Facts about Chapter 7 Bankruptcy:
- The sooner you get started, the sooner you can work on rebuilding your credit. The time from filing for bankruptcy to debt relief is typically 3-6 months. A bankruptcy can remain on your credit report for up to 10 years.
- You will be required to give up your credit cards. You will typically begin receiving offers again within 1-3 years after filing for bankruptcy. They will be at a much higher interest rate, but they will allow you to start rebuilding your credit.
- Nothing can relieve your student loan debt, however filing for bankruptcy can prevent lenders from aggressive collection tactics.
- Filing for Chapter 7 Bankruptcy does not relieve you of alimony or child support payments. Bankruptcy may alleviate other financial obligations that will allow you to more easily make these payments moving forward.
- Deciding against filing for Chapter 7 Bankruptcy may hurt you more in the long run as it may be more complicated to explain to lenders your missed debt payments, defaults, repossessions, or lawsuits.
- You may have to explain to a trustee how you got into your current financial situation. Talking about your financial failures may be difficult, but it is important to be open, honest, and realistic about your situation.
- If you have filed for Chapter 7 or Chapter 13 bankruptcy within the last 8 years, you cannot file for Chapter 7 Bankruptcy. If at least 70% of your unsecured debts have been repaid on a Chapter 13 bankruptcy, this time limit does not apply.
- You may not be able to discharge all of your debts (for example, a mortgage lien). There is no limit to the amount and number of debts that you can receive relief from.
- If you have a large amount of disposable income, your Chapter 7 bankruptcy case may get converted to a Chapter 13 bankruptcy case. You will then be required to submit a debt repayment plan that will allow you to repay over a longer period of time. This allows you to reevaluate your income and expenses to create a more feasible budget.
- While all of your assets will be evaluated, there are certain exemptions that are made for your home, personal property, annuities, and wages. This allows you to keep some or all of your property.
Filing for Chapter 7 Bankruptcy is a major step that you can take in order to solve financial difficulties that you cannot seem to get ahead of. It is a difficult decision, but it allows you the opportunity to learn about money, to get out from under a stressful situation, and make positive financial decisions moving forward.
At Seff & Capizzi Law Group, we regularly assist clients with their chapter 7 bankruptcy cases and provide valuable information for those that need assistance in understanding how to approach this case in their own lives.
If you need assistance with your chapter 7 bankruptcy case, please call us at (954) 920-9220. We have over 35 years of experience and offer a free consultation. Click here for more information about chapter 7 bankruptcy and how Seff & Capizzi can help.