Chapter 7 Bankruptcy allows for a person to erase his or her debts and get a financial clean slate in exchange for minimal asset liquidation and a one-time hit to the debtor’s credit history. Chapter 7 is not available to everyone, and if you are in debt, it may not be the best choice for your needs. However, under the right circumstances, this can be a powerful tool for reclaiming your financial freedom and escaping crippling debts.
How Does Chapter 7 Bankruptcy Work?
Chapter 7 bankruptcy discharges most consumer debts. It’s perhaps most commonly used for getting rid of medical debt, but it can also easily eliminate debt from credit cards and other forms of unsecured debts. Once debt has been discharged, debt collectors can no longer take action against you.
Secured debts, such as home mortgages or car loans, can be discharged through bankruptcy but doing so will not allow you to keep the property used as collateral. For this reason, you may find that bankruptcy is not a helpful option for dealing with these debts. However, erasing other debts through bankruptcy can help you to afford paying off your secured debts. Student loan debt cannot be erased through bankruptcy.
Are You Eligible to File for Chapter 7 Bankruptcy?
In order to file for chapter 7 bankruptcy, you must meet certain requirements in regards to household income and expenses. Essentially, you must be unable to pay your debts comfortable in any other way. Your income must be below the state median in most cases; you can show special circumstances to adjust this requirement, but this is not common.
Las Vegas Bankruptcy and Debt Settlement Attorney
Chapter 7 bankruptcy can provide a powerful tool for relieving you of crushing debts and starting over with your credit. It can be complicated to file however due to the amount of paperwork involved, and it’s not always the right choice for every individual.
Discussing your options with a financial planner can help you to decide not he best route for your needs. The Las Vegas bankruptcy and debt settlement attorneys at Lonardo and Jacovino, LLC can help you to understand your options and walk you through the process of filing for bankruptcy if necessary. Contact us today to schedule a consultation.