Things To Consider Before Chapter 7

Things To Consider Before Chapter 7 """The bankruptcy procedure can be riddled with questions and frequently leaves consumers feeling overwhelmed. Although the procedure is intended to be a useful resource, many individuals find it distressing. However, this is not necessarily the case. Before filing for bankruptcy, consumers should always seek the advice of a qualified bankruptcy attorney, and this is especially true for those considering Chapter 7. The reason for this is that the Chapter 7 procedure involves additional considerations, the majority of which should be reviewed prior to filing in order to maximize the success of the case.

Acceptable for Chapter 7

The qualification procedure is one of the more complex aspects of Chapter 7 bankruptcy filing. The bankruptcy statutes are structured so as to encourage consumers to repay their debts in full. In other words, if you can afford to repay your debts in some way, the bankruptcy procedure will assist you in achieving this objective. Therefore, the rules impose stringent income requirements for Chapter 7 eligibility. Specifically, the debtor's income must be lower than the state's median income level. If their income is greater than the state's median income, they are ineligible for Chapter 7 but may qualify for Chapter 13 instead.

Debts And Assets

The Chapter 7 procedure is appealing to many individuals seeking comprehensive debt elimination. We recognize, however, that this is not always possible for individuals with certain income levels. The type of debt carried also influences whether or not a Chapter 7 case will succeed. Because secured debts, such as mortgages and auto loans, can be liquidated by creditors for nonpayment, they are challenging to manage under Chapter 7. Unsecured debts, on the other hand, are readily managed in this type of filing because no asset serves as collateral for the loan.

The primary concern regarding asset protection in a Chapter 7 bankruptcy filing is the type of debt. Due to the fact that secured debts retain the asset as collateral, there is no assurance that they will be protected. Unless the asset is protected by exemption laws, it may not be protected from creditors in a Chapter 7 filing.

Credit Results

Perhaps one of the most troubling concerns for debtors is how the bankruptcy will appear on their credit report following the discharge. Although neither form of bankruptcy directly harms your credit, but can actually improve it, there are still factors to consider when applying for future loans. Many creditors will view a debtor with a Chapter 7 filing as a greater credit risk than one with a Chapter 13 filing. After a Chapter 7 discharge, debtors must exert a little more effort to demonstrate their fiscal responsibility.

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