Advantages And Cons Of Chapter 7 Bankruptcy

Filing for bankruptcy under chapter 7 is the best known way of writing off unsecured debt. It provides consumer debt relief in as little as 4 to 6 months, often without having to make a monthly repayment to your creditors.

The New Code for Chapter 7 Bankruptcy

Although the bankruptcy code was altered in 2005, this isn’t necessarily an obstacle to filing. With in excess of one million people filing for bankruptcy annually, it’s obvious that those who need to file still can. You need to gather some bankruptcy information.

Since the change to the law, it’s necessary to comply with a strict means test. The basic rule is that earnings for the last 6 months will need to be below the state median. There are other ways of qualifying, but the process is more complex. Most debtors who file for bankruptcy hire the services of an attorney, which costs about $2000.

When you’re struggling to pay your bills, it can be hard to find the cash. However, you’ll benefit from professional advice from someone who has considerable experience and knows how the system works. If you’re concerned or unsure whether chapter 7 is the best debt solution for your situation, their advice is extremely important.

Filing Chapter 7 Twice in 8 Years

If you’ve filed for chapter 7 during the last eight years, you cannot file twice within this timeframe. You’ll need to consider an alternative debt solution, such as chapter 13 bankruptcy or a debt settlement program. If you’ve got some income that you can comfortably pay your creditors, this isn’t an issue. However, if you’ve are jobless or have experienced poor health, it can be difficult to raise enough money to satisfy the requirements of your creditors.

Don’t Lose Items of Value

Although you can keep your home and the tools of the trade, non-exempt assets must be given to a court-appointed trustee. These are not limited to a expensive car, second home or valuable collection. Your assets will be realized and the proceeds disseminated to your creditors based on the amount that they’re owed. People file chapter 13 to protect assets that would otherwise be lost. In return for a contribution each month, most of your creditors will let you to keep certain items of value. However, you’ll need to keep-up with the repayments for a 3 or 5 year period.

Creditors Cannot Contact you for Repayment

Despite obvious downside, you will be afforded full court protection from your creditors. These mean that creditors aren’t permitted to contact you, unless they’re reaffirming debts, such as your mortgage or car loan. You aren’t able to write-off secured debts, but you can normally keep them through a separate arrangement. If the collateral has already been recovered, you can eliminate any deficiency. You cannot rid yourself of debts, such as child support, alimony, student loans and money that you need to pay to the Internal Revenue Service.

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