What is Chapter 7 Bankruptcy?
Chapter 7 involves the liquidation of non-exempt assets which are distributed to creditors. All forms of bankruptcy involve some sort of loss of assets. However, under a chapter 7 filing, singles, couples, and families usually are able to keep their house and cars. Chapter 7 also involves forgiving any unsecured loans held, such as credit cards, unsecured personal loans, and medical bills. The process for chapter 7 filing usually takes several months and involves one hearing.
It’s important to note that chapter 7 bankruptcy does not involve a repayment or installment plan. Filing for chapter 7 is about as close to a clean slate as one can get in bankruptcy, and has a track record of being better for your credit in the long run than alternative chapters.
Do I qualify for Chapter 7?
Not everyone can file under chapter 7. Individuals currently facing foreclosure or whose debt includes taxes may be unable to file for chapter 7. Additionally, chapter 7 was designed with families in mind who are very simply broke. As such, having larger quantities of assets or a significantly large income can also disqualify one from filing with chapter 7. However, it’s important to note that there is no disqualifying limit on the outstanding debts an individual has.
In addition to individuals and families, Chapter 7 bankruptcy can be filed by partnerships, corporations, and other business entities. As the US Courts say, though, “One of the primary purposes of bankruptcy is to discharge certain debts to give an honest individual debtor a ‘fresh start.'”
What will I need to file?
In addition to your lawyer to help you navigate the process, the court will want to see a solid paper trail. This includes tax returns, pay stubs, bank statements, liens, and as much paperwork as you can find on your income and assets. Remember, the more organized your paper trail is, the easier the process will be for you. Families with a mortgage must provide those. Also remember to consider any debts you had cosigned and who should bear the responsibility for those.
How can I protect my family?
Facing bankruptcy is frightening for anyone. There are many ways you can protect your family through this. The first is to have a good lawyer. Steven Willock has been practicing bankruptcy law in Tacoma, WA for more than 6 years, and has practiced for another decade before that in the rigorous California. Having a good lawyer in your corner is essential to make the process go smoothly and to ensure the best possible outcome for you and your family. In addition to your lawyer, your best protection is to get organized, and get prepared. Know your options so you can make the best possible decision. Your family will thank you!