In A Nuteshell, Chapter 7 Bankrupticy is an Excellent Way to Eliminate Unsecured Debt
However, Chapter 7 bankruptcy isn’t the be-all and end-all of your financial woes because there are certain debts that you can’t pay off through the bankruptcy court. Debts like child support payments and certain taxes can’t be paid through Chapter 7 bankruptcy. Tax liens, court fees, penalties, and personal injury debts incurred due to an accident when you were intoxicated can’t be settled through Chapter 7 bankruptcy, either.
If you want to keep your secured property, such as your house and vehicle, you need to reaffirm these debts and pay them through a “reaffirmation agreement.” Under the US bankruptcy law, a reaffirmation agreement requires you (the debtor) to repay some or all kinds of debts to the lender despite going through bankruptcy proceedings.
Who Qualiifies for Chapter 7 Bankruptcy?
When filing for Chapter 7 bankruptcy, you need to meet specific requirements or qualifications. These requirements are essential to protect the system from abuse.
You are required to undergo credit counseling within six months of filing. An authorized agency carries out these counseling sessions with the intent of helping you decide whether you need to file for Chapter 7 bankruptcy or take other informal repayment plans.
Pass a “means test.” This test examines all of your financial records, including your income, expenses, unsecured and secured debts, as a means to determine if your disposable income is below the median income (50% lower, 50% higher) for your state. The acceptable income level varies from one state to another.
Potentially Sell Assets
In some cases, you’ll be forced to sell any non-exempt assets, such as a residential property that’s not your primary home, valuable artwork, or expensive jewelry.
Pay Filing Fees
Pay a filing fee or ask to pay the fee in installments.
As long as you meet all of the qualifications, you can expect to complete the Chapter 7 process in about four to six months.
When Should You File for Chapter 7 Bankruptcy?
Filing for Chapter 7 bankruptcy allows you to reset your finances, but not everyone understands this option. Some choose to exhaust their resources on their own, thinking that they can still repay their debts, not knowing that this option will only cause more problems down the road.
Ideally, you should file for Chapter 7 bankruptcy if you notice any of these signs:
Amount of Debt
The total amount of your debt is more than half of your annual income.
Time to Pay Off
You need at least five years to pay off your debt, even if you exhaust all of your efforts and resources.
Your debt starts to affect other areas of your life, namely your relationships, productivity at work, and ability to sleep.
Lack of Disposable Income
Your disposable income is limited or zero because you must service your debt.
Your monthly income is way below the median level in your state.
Consult With an Expert at the Gill Law Firm
Your Lifeline is a Phone Call Away
Filing for Chapter 7 bankruptcy is a long and complicated process that requires legal expertise. Going through this process alone can cause a significant amount of stress, which can adversely affect the quality of your life.
If you think declaring Chapter 7 bankruptcy is the best way to go, given your current financial situation, sit down with one of our bankruptcy attorneys. We are a team of trained, qualified, and experienced bankruptcy attorneys who can determine if you’re eligible to file for Chapter 7 bankruptcy and give you a better understanding of the pros and cons of the process.
Reach us at 334-401-4420 today, and we’ll be happy to help you get out of a hopeless debt situation. Partnering with us can become your ticket to living a brand-new, debt-free life and rebuilding your future!