Monday, July 18, 2016
What Is A Chapter 7 Bankruptcy?
If you are behind on your bills you might be considering filing for bankruptcy, but have some questions about what that really means. Common concerns include wondering if your property will be taken away from you or if you get to keep your things without making the payments. Some people also worry about the potential damage filing bankruptcy has on their credit score and if that means they will never be able to take out a loan again. Rest assured that when you seek the protection bankruptcy has to offer your life is not over. You will be able to continue to conduct your financial affairs and you can start repairing your credit right away. It is also possible to keep your property when you file bankruptcy, but you do have to maintain regular payments on certain things. The pieces of collateral you continue to pay for depends on the choices you make when filing, one of those choices being what chapter of case you choose.
There are two main types of consumer bankruptcies, a Chapter 7 and a Chapter13. A Chapter 7 bankruptcy is best summarized as follows:
• Chapter 7 cases are like liquidations, meaning most of your debt is eliminated.
• There is no requirement that you continue to pay for your high interest rate credit cards or other unsecured debt in a Chapter 7 case.
• The things you want to keep, like your house and car, can be kept by agreeing to make the payments due on the loan. You can do this by signing a new agreement during your case, called a reaffirmation agreement.
Chapter 7 cases usually take about 90 to 120 days to complete. Once finished the debts that have been discharged are no longer due and the lender cannot ask you to pay. For debts that have been reaffirmed though, you do still owe the money and will be required to make the payments even after your case is finished. A Chapter 7 can help you get back on track with your finances and start fresh when thinking about how to budget your paycheck. Call us today to find out if this type of case is right for you.