During the tough economic times that we have all been experiencing lately and rising interest rates, many people have ended up with debt that they can no long pay off. There are many options for debt relief, of which Chapter 7 is one. But you don’t need to jump in before you know all the facts. This article will explain what you need to know to help you make an informed decision.

Chapter 7 Bankruptcy is know as “straight” bankruptcy because all the assets that aren’t exempt can be sold by the trustee in charge of your case to pay off your creditors. Some examples of exempt property may include automobiles, work-related tools, and basic household furnishings. Chapter 7 Bankruptcy must be filed in federal bankruptcy court and the filing fee is around $299. Of course the attorney fees are additional and the vary depending on who you hire to represent you.

Your debts can either be secured or unsecured. Secured debts mean that they are tied to an asset like your car for a car loan or your house for a mortgage. Unsecured debt is not tied to an asset and can be discharged or wiped out. Most unsecured debt can be discharged or wiped out. Debts can be secured, which means they are tied to an asset like your car for a car loan or your house for a mortgage, or unsecured. Unsecured debt is not tied to an asset and is usually credit card debt, medical bills, and signature loans. Some benefits are of filing Chapter 7 Bankruptcy is that most of your un-secured debts can be completely eliminated, the process moves quickly, creditors can’t contact you after you have a “stay” put in place or after the discharges are complete.

You must take a Chapter 7 “Means Test” to see if you qualify. To qualify, your income has to be lower than the median income in your state. If your income happens to be greater, there are other calculations that can be made to determine if you qualify. The majority of people who file Chapter 7 have no non-exempt assets. Chapter 7 is for you if you don’t have much property other than the basics and you don’t have any or much money left over at the end of the month after paying the basics.

Personal bankruptcy should be considered the last resort because the results are long-lasting. Bankruptcy stays on your credit report for 10 years and makes it difficult to obtain credit, buy a home, get life insurance, or sometimes get a job. While this is definitely a negative aspect, it is a legal procedure that offers you a fresh start. Now that you know the facts about Chapter 7 Bankruptcy, you can make a more informed decision.

___________________________________________________________

Back to Home Page of Debt Relief Advice

Back to Bankruptcy