What Will I Lose If I File Chapter 7?
If you are facing a huge debt profile with no possible way to repay it, it makes a lot of sense to consider alternative solutions. Many people fail to act on their debts until the creditor begins to harass them directly or through collection agencies. Creditors are allowed to take a wide range of actions that can impact the borrower if he or she fails to pay up what is owed.
As a borrower who is unable to service his or her loans, one of the best steps to take is to seek legal advice. Are you looking for a bankruptcy attorneys in Arizona? The process of getting one is easy if you know what to look for. To choose a bankruptcy attorney that is right for you, you must be willing to research and ask for help. You can begin by asking for recommendations from family, friends, and colleagues at work. They are likely to know someone who has helped them or a relative in the past. You can also use the internet to search for bankruptcy lawyers in your area. After searching through a list of recommended bankruptcy lawyers, you can proceed to vet each one based on the online reviews, qualifications, cases handled, years of experience, as well as client service, and satisfaction.
After choosing your desired bankruptcy attorney, the next step is to assess the situation of your finances and determine the best line of action to take. If you have been advised to choose chapter 7 bankruptcy, you need all of the information you can get on this process as well as what it means for you and your assets.
What Is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is one of the most powerful kinds of bankruptcy filings in the United States. This debt relief option allows filers to get out of huge debts that appear unserviceable and offer them a clean slate for them to rebuild their credit and finances. Chapter 7 bankruptcy, in essence, gives filers a fresh financial start by erasing all or most of their debts. However, the decision to file for chapter 7 bankruptcy is personal. Before a final decision is made, you should consider the pros and cons of the step.
The Upsides of Filing Chapter 7 Bankruptcy
Below are some of the advantages you stand to gain from filing a chapter 7 bankruptcy
Immediate Relief From Collection Efforts and Harassments
If you have in the past been harassed by your creditors and collection agencies, filing a chapter 7 bankruptcy grants immediate relief from all collection efforts. Once the case has been filed with the bankruptcy court, an automatic stay is triggered and this stops the creditor and collection agency from taking actions like filing a lawsuit against you, repossessing your home or vehicle, wage garnishment, phone calls, and others. This gives you the much-needed breathing space to plan ahead.
Permanent Debt Relief Once Bankruptcy Filing Goes Through
One of the biggest advantages that you stand to gain from filing a chapter 7 bankruptcy is that it wipes out all or most of your debts. Some of the affected debts that you get relief from include credit card debt, personal loans, medical bills, and more. In essence, all unsecured debts are eliminated once you are declared bankrupt by the bankruptcy court.
Getting Bankruptcy Discharged Is Almost Guaranteed
As a person that is faced with huge debt and has never filed for bankruptcy before, all you need to do is to pass the means test. The means test is put in place to ensure that filers are indeed incapable of servicing the loans or debts accrued. Once this has been passed, the chances of getting your debts discharged are high. The process is often completed in 3 months as long as you meet all of the requirements before and after the case has been filed.
You Will Possibly Keep Your Assets
One of the biggest questions people ask about chapter 7 bankruptcy filing is whether they will lose their assets. The answer is not clear cut, but the chances of losing assets are minimal. More than 95 percent of all people who file chapter 7 bankruptcies get to keep their belongings. This is because the law offers protection over certain properties. All properties that are protected by an exemption can be kept after the bankruptcy has been completed.
You Can Keep Your Car After Debt Discharge
While your debts may be discharged, you can decide to keep your car in the aftermath of the bankruptcy filing. However, you will be required to pay for it going forward. You may decide not to take on more financial responsibility by letting go of the car. But this will be solely your decision to make.
Bad Financial Decisions Have a Low Impact on your Credit Score After Filing Bankruptcy
After filing bankruptcy, you are presented with a clean slate and a chance to rebuild your finances and credit score. This means that bad decisions like missed monthly payments made in the past no longer have an impact on your credit score.
Better Access To Credit and Banking
Right after filing, you will get better access to credit offers which you can take or not. All of these are intending to help rebuild your credit and boost your credit score.
The Downsides of Chapter 7 Bankruptcy
Below are some of the negative impacts of a chapter 7 bankruptcy filing
You Can't Benefit From Chapter 7 Bankruptcy If You Make Too Much Money
If you are financially well off, you may not pass the mean test and this means that you may be unable to apply for or take advantage of the benefits of chapter 7 bankruptcy.
Your Good Credit Score Will Take A Hit
If you have a good credit score, the chances that a chapter 7 bankruptcy will negatively affect it is high. Be prepared to take a hit as you take the journey to rebuild your finances and credit score.
Not All Unsecured Debts Are Erased
Chapter 7 bankruptcy does not erase all of your unsecured debts. Some debts like student loans, tax debts, and more may be harder to purge.
Certain Types Of Properties May Be Lost
Filing for chapter 7 bankruptcy means that properties that fall under the nonexempt properties may be lost. Any type of property that the bankruptcy trustee can sell to pay creditors off may be claimed and sold as part of the filing.
Your Chapter 7 Bankruptcy Protects You Alone
A chapter 7 bankruptcy may eliminate your debt but does not offer the same level of grace to others, whether a spouse or children.
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