Five Chapter 7 Bankruptcy Basics

Chapter 7 bankruptcy is the preferred method of bankruptcy for most people. This is because a Chapter 7 case does not last as long as a Chapter 13, and in a Chapter 7 case you are allowed to get rid of all of your unsecured debt. Credit card debt is one of the most crippling debts a person or family can carry over from month to month, and eliminating it in its entirety can really free up some much needed money. When you no longer owe your credit cards or other unsecured debts, you can take the amount of money you’d pay each month on those minimum payments and use it for your house or car payment, or for groceries and insurance. But there are some rules to bankruptcy, and in particular whether a person is eligible to file a Chapter 7 case.

Here are five basic things to know about how Chapter 7 works:

•         When you file a bankruptcy case, you have to perform a complex mathematical computation to determine which type of case you qualify to file. This is called the means test, and the result of this calculation will tell you if you are eligible for Chapter 7.

•         If you are eligible for Chapter 7 you can expect to eliminate all of your unsecured debt.

•         For secured debts in Chapter 7, like cars and houses, you will either need to surrender those back to the lender or agree to continue making payments.

•         The way you agree to continue making payments in a Chapter 7 is by signing a reaffirmation agreement. A reaffirmation agreement is like a new contract for the loan, and will obligate you for the payments and account balance despite having filed for bankruptcy. This means if you don’t pay, the lender can still sue you for the debt.

•         A Chapter 7 is usually finished in about 4 to 6 months.

Chapter 7 bankruptcy helps thousands of people a year get back on their feet financially. When you have less debt you are simply better able to pay the debt that remains. Call us today to find out more.

For more information about Chapter 7 bankruptcy, 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.