Chapter 7 bankruptcy, like all other debt relief options, is a great method to eliminate debt, but only under certain conditions. If the court orders the liquidation of all your assets, you may end up losing everything. Consider whether you qualify for this form of bankruptcy, regardless of how appealing a quick debt relief may sound.
Chapter 7 bankruptcy should be filed if you have a very low income. The means test compares your monthly income to the remainder of your monthly expenses. If you have very little or no money remaining after paying for essentials, this is the best option for you.
If you earn a median income or more, you should NOT file for Chapter 7 bankruptcy. There is a high likelihood that you will be forced to file for Chapter 13 bankruptcy, in which you will be required to complete a court-issued repayment plan.
If you have mostly unsecured obligations, you should declare Chapter 7 bankruptcy. This debt relief is most beneficial for credit card debts, medical expenses, payday loans, personal loans, and other unsecured debts. This can be eliminated in a matter of months if you qualify to file for Chapter 7 bankruptcy.
You should NOT file for Chapter 7 bankruptcy if your debts consist of student loans, child support, and tax debts, as these types of debts cannot be discharged under any circumstances. These are not dischargeable. Mortgage and auto loans will also require you to liquidate your assets, so it is best to consider Chapter 13 to prevent the seizure of your properties.
Chapter 7 bankruptcy should be filed if you have few assets to preserve. There are protected properties, but their availability depends on your circumstances and the quantity of your property. If it is sufficient to cover your debts, you may be required to liquidate it to settle a portion of your debts. However, some states protect homes, automobiles, and other personal property, particularly if it is necessary to your livelihood. However, the primary residence is typically exempt from foreclosure.
You should NOT file Chapter 7 bankruptcy if you wish to retain multiple residences, vehicles, and other luxury items. As long as you are able to adhere to the repayment plan, you will be able to preserve your assets from being liquidated under Chapter 13 bankruptcy.
These are all general Chapter 7 concepts. It is in your best interest to consult a bankruptcy attorney for advice tailored to your unique circumstances. Each state has various laws and exemptions, so it is best to research them in order to determine how much protection a Chapter 7 bankruptcy filing can provide.
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