Bankruptcy As A Financial Restart Journey

Chapter 7 Bankruptcy Lawyer

If you are curious about what Chapter 7 bankruptcy entails, know that you are not alone. Many people consider filing for bankruptcy when they no longer feel in control of their finances. Despite some people frowning upon bankruptcy or being embarrassed about it, this is actually a great resource for those who need a serious restart so they can finally get a grip on their own finances. You may be too nervous to learn more about bankruptcy out of fear that you will be judged, but it is wise to keep self-criticisms at a minimum, as bankruptcy ultimately may be right for you. Too many people have a negative perspective on this resource, but it can be life-changing if appropriate for the individual’s circumstances. There are six different bankruptcy chapters available based on the person’s situation and needs:

• Chapter 9: Municipalities
• Chapter 12: Family Farmers
• Chapter 15: Foreign Cases
• Chapter 11: Reorganization
• Chapter 13: Repayment Plan
• Chapter 7: Liquidation

No need to be overwhelmed at the numerous bankruptcy options, as most people will be using either Chapter 13 or Chapter 7 bankruptcy. In particular, Chapter 7 bankruptcy is the most commonly used chapter for individuals. Under this status, a trustee appointed by the court will oversee the sale, or liquidation, of your assets so that creditors can be paid off. If you have remaining unsecured debts, like medical bills or credit cards, these may be discharged. However, there are other debts that cannot be gotten rid of by filing for Chapter 7 bankruptcy, such as taxes and student loans. Depending on the bankruptcy laws for the state you live in, there are assets that you may not have to utilize, such as your home, vehicle, or retirement accounts.

So how does someone know if they should file for Chapter 7 bankruptcy, and not one of the others? This is a conversation you should have with your lawyer, who must be familiar with bankruptcy law specifically. Your lawyer can walk you through the means test, which compares your income to the average for the state, and assesses whether or not you have enough disposable income to pay back a fair amount of debt to creditors. Keep in mind that even if you are eligible to file for bankruptcy and will help you in the long run, there are cons to consider. If you agree to a repayment plan, you will have to make sure you fulfill these new obligations. Furthermore, a bankruptcy status will stay on your credit report for a decade, and you can’t file again shortly thereafter. 

As our chapter 7 bankruptcy lawyer would agree with, those who are curious about bankruptcy will have to take a serious but hopefully optimistic look at their finances before embarking on such a journey.