Chapter 7 Bankruptcy – What You Need to Know
For some, the phrase “Chapter 7” may sound like a science-fiction novel or a scene in a movie. But for many American citizens, understanding Chapter 7 bankruptcy is key to relieving financial burdens and getting back on their feet. So what is it, and why should you know about it? Let’s explore!
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is a legal right granted by the United States government to individuals dealing with serious financial problems. It allows them to legally discharge most of their debts and make a fresh start financially. When filing for Chapter 7 bankruptcy, you must provide detailed information about your current financial situation including income, assets, liabilities and expenses. Once you have filed for bankruptcy, an automatic stay is put into place which prevents creditors from taking any further action against you until your case has been resolved.
How Does It Work?
Once you file for Chapter 7 bankruptcy, your assets are evaluated and sold off in order to pay off as much debt as possible. Any remaining debts are then discharged by the court, allowing you to get a fresh start financially. However, there are certain types of debt that cannot be discharged through Chapter 7 bankruptcy such as student loans (unless they can be proven “undue hardship”) and child support payments. Additionally, any assets that are not exempt from sale will be liquidated in order to pay off creditors.
What Are The Benefits of Filing for Bankruptcy?
The primary benefit of filing for Chapter 7 bankruptcy is that it can help relieve the burden of overwhelming debt. After all of your debts have been paid off or discharged through the process, you will no longer have to worry about making payments or dealing with harassing collection calls from creditors. Additionally, once your case has been resolved, your credit score will begin to improve over time as long as you continue making responsible financial decisions going forward.
Overall, filing for Chapter 7 Bankruptcy can be beneficial if done responsibly and correctly. It offers American citizens an opportunity to find relief from overwhelming debt and get back on track financially. Of course it should always be used as a last resort since it does come with consequences such as damage to one’s credit score (although this too can improve over time). If you’re considering filing for Chapter 7 bankruptcy or just want more information on how the process works, consulting with an experienced attorney would be your best bet!