When the amount of your debt exceeds your ability to repay it, you can be left feeling overwhelmed. Many people go through financial hardships, and the government has designed various types of debt relief to help them through these situations. One common type of debt relief includes Chapter 7 bankruptcy. Here is a bit of information about Chapter 7 to help you better understand it:
What are some of the benefits of Chapter 7 bankruptcy?
People who are approved for Chapter 7 bankruptcy are often able to keep all of their personal property. Additionally, they are not required to repay the debts that are discharged by the bankruptcy. Thus, a Chapter 7 approval can help ensure that you get a fresh start to rebuild your finances.
What types of debts can be discharged through Chapter 7 bankruptcy?
Chapter 7 bankruptcy can include multiple types of unsecured debts, such as the following:
- Business debts
- Medical bills
- Credit card debts
- Civil judgments
- Delinquent rent payments
- Past due utility bills
How is eligibility determined for a Chapter 7 bankruptcy?
Eligibility is highly dependent on your income. If the amount of money that you make each month is below the median for your state when compared to the income of other state residents who have a similar number of people in their home, you are automatically qualified for Chapter 7 bankruptcy. However, if your income exceeds the state median, additional income components may be considered to determine eligibility. A math formula is used to assess the amount of disposable income you have available each month. If your disposable income is greater than the prescribed limit, you will not be eligible to file Chapter 7.
Are there alternatives to Chapter 7 bankruptcy?
A common alternative to Chapter 7 bankruptcy is Chapter 13. This type of bankruptcy reduces the amount of debt you owe but does require you to pay back some of your debts owed. This repayment can occur over a three to five-year period. The court determines the amount that you will need to pay after considering your current income. After the repayment period is complete, any residual debts are discharged.
Can any of my property be seized after the bankruptcy ruling?
With a Chapter 7 bankruptcy, you are not likely to have to surrender any of your property. Nevertheless, if some of your belongings, such as a car or truck, have been promised as collateral for one of your debts, it may be lost to a lender.
For more information, contact Arthur M Richard or a similar legal professional.