What You Should Know About Chapter 7 Bankruptcy
Chapter 7 bankruptcy is a powerful legal tool in the United States and is farmer common than most people think. It is estimated that over 39 million Americans file for bankruptcy and many of those file under a Chapter 7 bankruptcy. This tool can allow you to totally erase many debts, which include credit card debt, medical debt, car loans, and even payday loans.
A good question to ask yourself if you’re considering a chapter 7 bankruptcy is do you have more debt than you are ever going to be able to pay back given her current income and property? If the answer is yes, the chapter 7 bankruptcy may be the right option for you.
How Does Chapter 7 Work?
In a chapter 7 bankruptcy you will fill out forms about what you earn, spend, own, and owe and submit these forms to the bankruptcy court. You will also have to submit recent tax returns and pay stubs if you are employed.
From there, your bankruptcy lawyer will fill out forms and documents. They will also hold a meeting of creditors, which is where the last basic questions about your financial situation are.
A couple of months later, you will get a notice in the mail from the court letting you know if the court has granted you a bankruptcy discharge. For the vast majority of people who are honest and fully fill out the bankruptcy forms, the steps go by rather quickly. If you do not fill out these forms correctly or honestly in your application, your file for bankruptcy can easily be denied.
What Debt Can And Cannot Be Erased?
Chapter 7 bankruptcy can erase the following common debts:
- Credit card debt
- Medical bills
- Car loan deficiencies
- Personal loans and payday loans
- Judgment from credit cards and debt collection agencies
- Utility bills
These steps are known as dischargeable debts. The moment someone files bankruptcy an automatic stay goes into effect. This will temporarily stop anyone from collecting the debts that you owe them while you’re going through this process.
Just like there are debts that’s the can be erased there are debts that cannot and they the following:
- Child support and alimony
- Recent tax debts and any other debts you owe the government, like fines
- Student loans
The steps are known as non-dischargeable debts. They are not going to be erased if you file for Chapter 7 bankruptcy as they do not follow the same rules as debts that can be erased.
If you are still unsure about whether Chapter 7 bankruptcy is the right step for you and we suggest that you talk to a bankruptcy lawyer, for more information about what is expected.