Chapter 7 bankruptcy may be the most common chapter filed but it is common to have questions about the process if it is being considered as a solution to help handle overwhelming debt. Discussing questions and concerns with a qualified bankruptcy lawyer can help determine if the process if right for you.
Common Questions About Chapter 7 Bankruptcy
The following questions are often asked by consumers considering Chapter 7:
What is Chapter 7 Bankruptcy?
It is a personal bankruptcy that allows consumers to eliminate or discharge qualifying debt. It’s often filed by those with little or no assets. Also known as liquidation, consumers with non-exempt assets can use the proceeds to pay off creditors.
What is Considered a Non-Exempt Asset?
When you file bankruptcy there are exemptions in place that allow you to keep certain assets, meaning they are off limits for creditors to seize as a form of payment. Each state has specific exemptions for Chapter 7 that allow consumers to keep their home, vehicle and other personal belongings.
What is the Means Test?
The means test helps in determining whether or not you qualify for Chapter 7. The test basically reviews your financial situation including income and family size. The information helps understand what you pay in monthly expenses, what disposable income you have available (funds remaining after paying necessary expenses) and likelihood of your income meeting or exceeding the median amount for your state. If you exceed the median amount, you may qualify for Chapter 13 bankruptcy .
What Debt is Eligible for Discharge in Chapter 7?
Unsecured debt such as credit card debt and medical bills; unsecured debt doesn’t have property attached to it. There are different types that qualify for discharge but certain debts such as student loans, alimony and child support are non-dischargeable.
Why is it Recommended to Work with a Bankruptcy Attorney?
While you have the option to file independently, the bankruptcy code is complex for someone unfamiliar with the system. Retaining legal counsel ensures bankruptcy laws are followed accordingly and reduces the chance of getting your case dismissed without discharging debt.
Considering Chapter 7 Bankruptcy? Let us See if Bankruptcy is Right For You
If you are considering chapter 7 bankruptcy but you are not sure if it is right for you, let us know. You can call us or fill out our contact form to set up a free consultation. We are always here to help.