Four Things To Know About Chapter 7 Bankruptcy Cases

Of the two main types of consumer bankruptcy, Chapter 7 and Chapter 13, Chapter 7 is by far and large the most preferable. A Chapter 7 case is a liquidation of debts while a Chapter 13 is a reorganization of what you owe. But not everyone is eligible to file a Chapter 7 case, and in order to find out if you qualify, you need the help of a qualified bankruptcy attorney. Complicated statutory requirements have to be met, and if you make a mistake when applying the law to your particular set of circumstances, you risk having your case dismissed. However, when you put your faith in a trusted bankruptcy attorney, you can rest easy knowing the right applications are being made in your case.

Four things to know about a Chapter 7 bankruptcy are:

•         A Chapter 7 case usually takes between 3 and 6 months to complete.

•         You are permitted to discharge all of your unsecured debt in a Chapter 7 case, including high interest rate credit card debt, signature loans, and medical bills.

•         If you decide to keep some of your collateral, you can expect the lender to ask you to sign a reaffirmation agreement. A reaffirmation agreement is a document drawn up usually by the lender, and it outlines what you are obligated to repay. When you sign a reaffirmation agreement, you are agreeing to obligate yourself financially for the debt, even after the bankruptcy case is over. This means that if you miss a payment, the creditor can try and collect on the loan.

•         Chapter 7 cases are reserved for those debtors that have a certain percentage of income as it relates to their secured debt. The determination is made by performing a complex mathematical calculation referred to as the means test. If you “pass” the means test, you will be allowed to file a Chapter 7.

The decision to file bankruptcy is not one to arrive at without serious thought. There are many considerations to take into account, including how your credit score will be impacted by filing a case. We will explain how it works to you, so you can make a choice that will allow you to straighten up your budget.

If you have more questions about bankruptcy or need help deciding what to do about overwhelming debt, contact us at www.law-ri.com. We will help by coming up with solutions that work for you and have multiple locations to meet your needs for office visits.