Are you thinking about filing for bankruptcy? Many individuals have contemplated filing for bankruptcy. Some of these people have even looked into the process and have decided that bankruptcy is the best way to deal with their financial troubles. Bankruptcy can be a difficult process, so if you are going through it, it is important to know what to expect. Here is an overview of the process and some information on the time it could take you to complete it.
How Chapter 7 Bankruptcy Works
A Chapter 7 bankruptcy is a liquidation proceeding that allows debtors to surrender nonexempt assets to the bankruptcy trustee for liquidation and distribution to creditors. The goal of a Chapter 7 bankruptcy is to wipe out most or all of your unsecured debts.
To qualify for Chapter 7, you must pass a “means” test that measures monthly income against state-prescribed thresholds. If you pass the means test, you must also show “good faith” in resolving your debts outside of court. You can file for Chapter 7 independently or hire an attorney to help.
Who Should File for Chapter 7 Bankruptcy?
In case you’re wondering how to file for chapter 7 bankruptcy, in most cases, you should file if you can’t afford to pay back any of your debts. This is because Chapter 7 bankruptcy allows you to discharge most debts in exchange for giving up any nonexempt property.
Not everyone is eligible to file for Chapter 7 bankruptcy, however. You must meet certain requirements before filing. If you don’t meet these requirements or don’t want to give up some of your property, then Chapter 13 might be a better option for you.
How to Qualify for Chapter 7 Bankruptcy
If you want to qualify for chapter 7 bankruptcy, you have to meet certain requirements:
- To qualify to file bankruptcy, your average income should be lower than the mean income of your state. This is determined by looking at your income and expenses over a six-month period.
- One of those requirements is that you’ve gone eight years without filing for chapter 7 or 13 bankruptcy.
- Another requirement is that you haven’t filed for chapter 13 bankruptcy within the last six years.
How Long Does the Process of Filing for Chapter 7 Process Take?
The time it takes to file for bankruptcy can vary depending on many factors, including the complexity of your case and the number of creditors involved.
The average time for a Chapter 7 case is 4 to 6 months from filing to final discharge. However, this time frame can be longer if you have complex issues or if you have secured debts (such as a mortgage) that need to be paid off before you can proceed with a discharge. You will need a bankruptcy attorney to help you complete the process fast.
There are also certain circumstances in which your case may be dismissed: If you fail to file all required documents on time if you do not appear at scheduled hearings, if you fail to make payments as agreed upon by your plan, or if you do not comply with court-ordered sanctions.
Debts Which Chapter 7 Bankruptcy Dismisses
In Chapter 7 bankruptcy, you’ll be able to get rid of debts that would otherwise make it impossible for you to stay afloat financially. These include:
1. Medical Bills
If you have medical bills you can’t pay, Chapter 7 bankruptcy will help you eliminate these debts.
2. Business Debts
Chapter 7 bankruptcy is also good for business owners who want to discharge their business debts.
3. Past-due Rent or Mortgage Payments
If you’re behind on your rent or mortgage payments, Chapter 7 bankruptcy can help you discharge these debts.
4. Old Tax Penalties
If you have old tax penalties, Chapter 7 bankruptcy can also get rid of them.
What Debts Does Chapter 7 Bankruptcy Not Cover?
There are some debts that Chapter 7 bankruptcy does not cover. These debts include:
Secured loans like mortgage and car loans. These are loans where you have pledged a specific asset (like a house or car) as collateral for the loan. If you don’t repay the loan, the creditor can take your property.
Debt Due to Criminal Activities
Debts incurred due to criminal activities. Bankruptcy laws require you to disclose any criminal activity on your credit report that occurred within two years before filing bankruptcy. If you have committed a crime, then it is likely that the debt will not be discharged in bankruptcy and will still need to be paid back by you or your estate after your death.
Student loans are also not dischargeable in bankruptcy, except in very rare circumstances where they were obtained through fraudulent means or were obtained. At the same time, you were under 21 years old and unable to legally enter into contracts in most states (which means they should never have been taken out in the first place).
What Is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is a type of personal bankruptcy that allows you to eliminate debt and get a fresh start. To qualify for Chapter 7, your debts must be primarily consumer debts (credit card debt), and you must be able to repay those debts within three to five years.
What Are the Benefits of Filing for Chapter 7 Bankruptcy?
Being able to wipe out your debt can have many benefits. It can help you avoid having to deal with creditors while they seek repayment on the debts they hold against you. If you’re looking for relief from monthly payments, filing for Chapter 7 could be an excellent option for you.
Who Can File for Chapter 7 Bankruptcy?
Anyone who meets certain criteria may file for Chapter 7 bankruptcy; however, it’s important to note that not everyone will qualify under these guidelines. One requirement is that the debtor’s income must not exceed the median income in their state or local area (whichever is lower). The other requirement is that the debtor has had their debts fall into default within two years of filing or four years if they seek relief from repossession or foreclosure.
Why Do I Need a Lawyer for Chapter 7 Bankruptcy?
Filing bankruptcy chapter 7 is very complicated, and the law can be difficult to understand. A bankruptcy lawyer can help you make informed decisions about your case and guide you through the process. It’s also important to consider that the courts have the final say on what happens with your case. If you don’t follow all of the rules, your case could be dismissed, or you could lose some of your assets.
When you are considering bankruptcy, and whether or not to file, you need to be educated on the time sequence of your state’s bankruptcy process. It is also important to establish whether or not you have assets and decide if you can maintain those assets while filing for bankruptcy and what forms of assets are exempt from your filing.