Michael D. Hart, P.C.

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Know the benefits of filing Chapter 7 bankruptcy

| Apr 10, 2020 | Chapter 7 Bankruptcy |

When you realize that you can’t pay your bills, you might start to look at ways to make ends meet. The downturn of the economy may mean that you don’t have all the options at your disposal that you might have previously had. For some people, sudden job loss or emergency medical bills leave them needing to find a way to satisfy creditors. One option you might consider is filing a Chapter 7 bankruptcy.

Filing a Chapter 7 bankruptcy requires that you pass the means test, which is meant to ensure that you don’t have the income or assets that would enable you to restructure your debts and pay them off over time under the oversight of the court. If you can’t pass the means test, you’d need to look into filing Chapter 13 bankruptcy instead.

There are many benefits to filing a Chapter 7 bankruptcy. One of these is that the creditors won’t be able to contact you in an effort to collect the debt once you file. The court issues an automatic stay, which prevents all collection efforts. It’s also possible that you’ll be able to stop wage garnishments, utility disconnections and other similar actions, but remember that these are just pauses in these activities.

When you file a Chapter 7 bankruptcy, the court looks at your entire financial situation, including what assets you hold. Anything that’s classified as nonexempt will be taken by the court and liquidated to satisfy as much of the debt as possible. Whatever debt is left after this is discharged except for very specific debts like taxes, court fees, child support, student loans and alimony.

People who are considering filing Chapter 7 should learn about what responsibilities they have, as well as what protections they receive. Filing as soon as possible can help them to get a fresh financial start quickly.