Bankruptcy is a scary word and it can be a damning word for your personal finances for quite some time. Chapter 7 bankruptcy is the typical filing you do when you’re personally bankrupt for whatever reason. It is the liquidation of your assets as a way to repay outstanding debts owed to credit card companies or other bills.
Personal bankruptcy is a big step but often a necessary one to get your finances back on track.
There are good things and bad things about filing for Chapter 7 bankruptcy, however, that you must consider before committing. This is not a quick fix and it’s not an easy fix to your financial problems. First you need to consider if you qualify period and then weigh what you will lose for what you will gain once you start the Chapter 7 bankruptcy process.
Below are some of the things to know and consider about declaring bankruptcy and what you can expect the fall out to be.
Do You Qualify?
There is first a means test to decide if you qualify for declaring bankruptcy. The process of bankruptcy protects you from bill collectors but you have to be in a certain amount of dire straits to use it. You must earn less than the state’s median income monthly. This isn’t determined simply by a paycheck, the monthly bills and debt you owe are taken into account as well.
What Is Discharge?
One helpful part of bankruptcy is discharge. This prevents any creditors from ever attempting to extract repayment out of you on any debts owed prior to the declaration go bankruptcy. They can no longer hound you for money because the courts ruled that a credit card company can afford the loss of repayment when you declare bankruptcy.
This is a great benefit for those who are under immediately stress from creditors seeking loan payments. Once you file and your paperwork is in process, you cannot be sought out by creditors and this postponement of calls stays in effect during the course of the court ruling on your bankruptcy filing. Even if you ultimately don’t qualify, you get a small period of reprieve for filing in the first place.
What Are the Cons?
The biggest thing to note is a loss of assets. Any and all assets available will be used to pay back what you owe. Attempting to sell items off prior to your intention to file in order to keep possession of them is illegal. Another big con to filing is what it will do to your credit score, it also does not erase your history of bad debt, even when thee debts are fully paid.
What Does Not Qualify Under Bankruptcy?
Bankruptcy does not allow you to stop payments on alimony or child support. While you can clear out other debts, you must continue to make legally compelled child support and alimony payments to your previous partner throughout your bankruptcy.
Know the consequences of filing for bankruptcy and know what you qualify for. More importantly, consult with an experienced bankruptcy attorney to get you on the right track.
Hines Law is a Massachusetts Bankruptcy Firm ready to safeguard your interests and help rebuild your future. Our bankruptcy attorneys have the knowledgeable and experienced to expedite your case. We will work closely with you to ensure you are informed during the entire process of filing for Chapter 7, until your qualifying debt is discharged.
Find out which debt relief solution is right for you and call us today for a Free Consultation!