A Chapter 7 bankruptcy is the most common bankruptcy filing for individuals. There are no repayment plans or a reorganization of debts in a Chapter 7 filing. In fact, you will receive a discharge in approximately 4 – 5 months after the filing of your Chapter 7 bankruptcy is filed and will be able to begin re-building your credit and start anew with your fresh start.
A Chapter 7 bankruptcy does not require you to repay your creditors. Those bills with ever increasing interest, medical bills that do not seem to go away, and other debt is discharged in the Chapter 7 filing. Also, you may keep vehicles that are being financed and your home so long as you remain current on those bills. The Chapter 7 bankruptcy truly provides a road to a fresh start from previous debts and allows you to re-build.
However, this path to a fresh start does have some dangers. Specifically, if you have property that is not properly exempted (protected), then the property could possibly be liquidated for the benefit of your creditors. There are exemptions (State protections) that will allow you to keep the majority of your property, but it is important to reveal all of your property with your attorney, if represented, to ensure that you dare able to protect your property.
Lastly, a Chapter 7 bankruptcy is not for everyone. In fact, not everyone may file a Chapter 7 bankruptcy. In 2005 the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”) went into effect and affected the qualifications to file a Chapter 7 bankruptcy. Specifically, BAPCPA created a “means test” wherein every potential filer must review their income to identify if their income is is higher than the state median income or portion of their debts. Here is a link to the current state median income levels per the US Department of Justice. This is an action that must be contemplated in every Chapter 7 filing.
A Chapter 7 bankruptcy filing may appear “simple”, but there are many hidden pitfalls and dangers that you may not see. In fact, Judge Charles Case, a retired United States Bankruptcy Judge, issued a statement in the following video:
A Chapter 7 bankruptcy may be beneficial to you and your family for that fresh start and clean cut from bad debt, mounting medical bills, and unintended bills. MacLeod Peterson is a firm wherein our bankruptcy attorneys have assisted thousands of individuals become debt free through the bankruptcy process. We are here to help. If you would like to learn more about a Chapter 7 bankruptcy and how it may benefit you, then please contact our office and schedule your free consultation to review your options.