Chapter 7 bankruptcy is usually the target of people opting for this debt relief. Sometimes called as "straight bankruptcy", this will not require the debtor to fulfill any repayment scheme, unlike a Chapter 13 bankruptcy. After all the requirements and qualifications are met, it can discharge all of your unsecured debts. It is also provides strong protection against all your creditors and collectors. They can no longer come after you. Any wage garnishments, calls, foreclosure and repossession threats will stop once you are in the midst of a bankruptcy process.
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Like all other debt relief options, Chapter 7 is a great way to get rid of debt - but only under the right circumstances. You may end up losing everything when the court orders a liquidation of all your assets. As appealing as a fast debt relief sounds, consider first if you have the right circumstances to file for this type of bankruptcy.
You should file for Chapter 7 bankruptcy if you have a very small income. The means test will check the amount of money that you get every month and will compare that to the rest of your expenses. If you have very little or no money left after your basic necessities are paid for, this is the right option for you.
You should NOT file for Chapter 7 bankruptcy if you earn a median income or higher. There is a high chance that you will be pushed to file for a Chapter 13 bankruptcy wherein you will be asked to complete a repayment term that will be issued by the bankruptcy courts.
You should file for Chapter 7 bankruptcy if you have mostly unsecured debts. This debt relief is best for credit card debts, medical bills, payday loans, personal loans, and other types of unsecured debts. This can be wiped out in a matter of months if you qualify for a Chapter 7 filing.
You should NOT file for Chapter 7 bankruptcy if your debts consist of student loans, child support and tax debts - these cannot be discharged unless you are under very special circumstances. These cannot be discharged. Mortgage and car loans will also require you to liquidate your assets so best to consider Chapter 13 to protect your properties from being taken from you.
You should file for Chapter 7 bankruptcy if you have little property to protect. There are properties protected but that will depend on your situation and the amount of your property. If it is enough to cover your debts, you may be asked to liquidate that to pay off a part of what you owe. However, some states protect homes, cars, and other personal properties - especially when it is needed for you to earn an income. Most of the time though, the primary home is protected from foreclosure.
You should NOT file Chapter 7 bankruptcy if you have multiple homes, cars and other luxury items that you want to keep. The best option for you is a Chapter 13 bankruptcy because as long as you can keep to the repayment scheme, you will be able to protect your assets from being liquidated.
These are all general concepts about Chapter 7. It is best for you to consult a bankruptcy lawyer to get specific advice about your unique situation. Each state have different laws and exemptions so it is best to find them out to know the extent of protection that you can get from a Chapter 7 bankruptcy filing.
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