No one sets out planning to file for bankruptcy chapter 7.
Unfortunately, with the way that the global economy is right now, more and more people are forced into this financial reset than ever before. It’s critically important that you understand exactly what you’re getting into when you decide to “hit the button” and move forward with bankruptcy chapter 7, and hopefully we are going to be able to share some key considerations you’ll want to pay close attention to in this quick guide.
Shall we dive right in?
Understand the basics of chapter 7 bankruptcy
The most important thing that you have to think about before you decide to file for bankruptcy is that you are making the right decision of the two major types of personal bankruptcy available.
Chapter 7 allows you to walk away from all of your debts entirely, but it is going to require some pretty stiff repercussions (like selling off the overwhelming majority of your assets to repay down the debt that you had owed – or at least as much as possible).
Chapter 13, the other hand, allows you to draft a court-approved plan to repay all or most of your debts over a block of time – but that isn’t quite as “painless” a process as the Chapter 7 groups he process can be.
Bankruptcy is a life altering decision, but not a life ending one
Yes, bankruptcy Chapter 7 filings can be seen as a bit of a “nuclear option” when you find that you have more debt than income to cover your debt repayment and your basic expenses – but that doesn’t mean that you are life is over when you file for bankruptcy.
Not by any stretch of the imagination!
Each and every year, hundreds of thousands of people all over the United States file for bankruptcy to essentially reset their financial lives. And each and every year, hundreds of thousands of people that have already made this decision in the past find themselves on the path to recovery a lot faster than they probably thought it would happen.
Filing for bankruptcy Chapter 7 requires a qualifying action
If you are going to file for this type of bankruptcy, you are going to have to prove that your income is either below the state median or below the amount of money you’d need to meet your basic expenses and repay your debt.
This is why you’ll want to be sure to speak with a credit counselor, a financial adviser, and a bankruptcy lawyer to better understand exactly what you are getting into and whether or not you are going to be able to move forward with this process.
Because bankruptcy is so often the “nuclear option” as mentioned above, the odds are pretty good that if you’re thinking about filing for bankruptcy protection you likely meet the qualifications necessary to move forward with Chapter 7.
At the end of the day, these are the kinds of things you’ll want to go over with bankruptcy professionals so that you get the help you need as you move through this often difficult – but not insurmountable – financial situation.