Most people are afraid of filing for bankruptcy in general. They think that filing for bankruptcy meant loss of credit score forever, loss of financial credibility and total wipeout of their assets and properties. While some of this can be true, many of these fears simply come from myths and misconceptions. Not to mention they have little idea that they have options – in a form of what we call “Chapters”.
When they learned about the Chapters, they turn to fear Chapter 7 the most.
Chapter 7 Bankruptcy case deals with liquidating your assets, and have the proceeds be paid to your creditors. In other words, you lose those assets and properties. Hence, many people avoid Chapter 7.
While Chapter 7 is mainly about liquidation, your assets won’t necessarily be liquidated. If you get a great bankruptcy lawyer, you may even save most or all of your properties. KT Bankruptcy Lawyers simply specialize in that matter!
This doesn’t mean Chapter 7 is always the best option out there, but at least, it’s good to consider it – instead of immediately avoiding it.
When thinking of which chapters to file, it’s best you have an expert bankruptcy lawyer to help with your case!
So, here are the things you need to learn about Chapter 7 Bankruptcy case. In the end, you will see that it isn’t just about liquidating your assets; it’s actually the last resort.
1. Chapter 7 Is The Fastest And Easiest Way To Fix Your Debt Issues
You have to understand that every form of bankruptcy is a remedy to your debt issue. However, among all the Chapters, Chapter 7 is the easiest to file to because there’s little need for checking and documenting your assets. Let’s contrast that to Chapters 11 and 13.
Chapter 11 and Chapter 13 need more requirements to make you eligible for filing them because they mainly focus on reorganizing and restructuring your assets to prepare for a repayment plan. Chapter 7 doesn’t require much, though you need to past a Means Test to be eligible to file it.
2. You Can Eliminate Most (Sometimes, All) Of Your Unsecured Debts
An unsecured debt is a debt that’s not connected to an asset. A perfect example is a credit card or personal loan.
Debts that are connected to an asset such as a car (auto loan) or house (mortgage) are called secured debts.
In a Chapter 7 case, unsecured debts are the last priority, that’s why sometimes they’re just wiped off.
3. Chapter 7 Provides You A Fresh Financial Start
One thing many people fear about bankruptcy is that, it will remain in their credit record for up to 10 years. Sadly, that’s true. But if you can’t even pay your debts anymore, there’s no choice but to save yourself through bankruptcy.
What you should think about is how you’ll recover financially rather than how to save your credit records – the moment you sank in debts, your credit record is ruined anyway. In fact, bankruptcy, in this situation, is your saving grace – even if it remains in your record for 10 years.
As far as cases are concerned, a person who filed for bankruptcy can recover his/her credit within 1-2 years, depending on how financially diligent he/she is. Although a bankruptcy record can distort your credit record, it will not totally ruin it if you’re disciplined and diligent in rebuilding your financial well-being.
So, bankruptcy – of any Chapter, including Chapter 7 – will provide you a fresh financial start.
4. Chapter 7 Provides You An Automatic Stay
What is an “automatic stay”? It means that your creditors can’t chase you off once you filed for bankruptcy. In general, except with certain relative limitations, you actually get to remain in power over your assets and properties. As said before, liquidation is the final resort – even in a Chapter 7 Bankruptcy case.
In short, the idea that bankruptcy meant you’ll immediately lose your assets and properties is totally false. Yes, that can happen, but not that fast!
Now, you understand the basics of Chapter 7 Bankruptcy case. As you can see, it’s not as scary as you think.
We hope you consider it as part of your options rather than something to avoid. If you need any help in legal matters, KT Bankruptcy Lawyers will be glad to assist you!