Pros And Cons Of Filing Chapter 7 Bankruptcy
What Is Chapter 7 Bankruptcy?
Deciding whether to file for chapter 7 bankruptcy can be a stressful and challenging one. For informational purposes, bankruptcy information is presented below. This is not legal advice and we recommend that you speak with a licensed attorney for legal related questions.
Chapter 7 bankruptcy is categorized as a “liquidation.” What does liquidation mean? It means that in the chapter 7 bankruptcy process, the debtor’s (you) non-exempt assets, are sold by the Chapter 7 trustee. The earnings on the sale of your non-exempt assets are given to your creditors based on the priority which is established in the bankruptcy court.
In addition, if you are behind on your home, it is more difficult to protect your home in a Chapter 7 bankruptcy from foreclosure without first catching up. It can be difficult to catch up on months of backpayments. In addition, many times, not all debt is dischargeable in a Chapter 7 bankruptcy such as student loans or various tax debts.
Wow, that’s a lot of information to process. So let’s just break it down in more simple terms.
If you file for Chapter 7 bankruptcy and you have non-exempt assets, they may be sold in order to compensate creditors.
What constitutes a non-exempt asset?
Your state’s bankruptcy law determines that. You are allowed to keep a certain amount of your assets, but if your assets are valued over what the non-exempt law limits then it is subject to the bankruptcy trustee’s decision to sell or abandon it.
Remember that the Trustee makes a percentage of the proceeds from the sale of your non-exempt assets, so he/she is pretty motivated to sell any asset with value.
You may be thinking, “Bankruptcy doesn’t sound like such a good solution after-all.”
Am I Eligible To File Chapter 7 Bankruptcy?
First of all, if you have filed bankruptcy before, you need to consult your state’s bankruptcy laws to see what the cutoff date is before you can file Chapter 7 bankruptcy again. If you have never filed bankruptcy, then the first step in figuring out whether you can file for Chapter 7 bankruptcy is to compare your monthly income to the median income for an individual like yourself/a family like yours in your state.
If you make less or the same as the median income in your state then you should be eligible for Chapter 7 bankruptcy (assuming you meet all other Chapter 7 bankruptcy eligibility requirements in your state).
If you make more than the median income then, by requirement of the bankruptcy law, you will have to pass “the means test” in order to file Chapter 7 bankruptcy.
”What Is The Means Test?”
The means test is designed to check your disposable income. The higher the disposable income, the less likely you are to be eligible to file Chapter 7 bankruptcy. The means tests subtracts specific monthly expenses from your monthly income (your current monthly income is calculated over the six calendar months before you file for bankruptcy) to arrive at your monthly “disposable income.”
So if your disposable income is high, then, yes, you might not be eligible to file for Chapter 7 bankruptcy.
How Long Does A Chapter 7 Bankruptcy Stay On My Credit?
Bankruptcy And The Emotional Issues
Many clients explain to us, “I wanted to avoid filing bankruptcy at all costs. I grew up with accountability to pay back what I owe and walking away from it isn’t what I want to do. On top of that, the stigma of having to admit I filed bankruptcy 20 or 30 years from now by a future potential employer, is awful.”
Some clients who filed bankruptcy instead of entering into the program expressed to us, “I wish I had never filed for bankruptcy and had instead tried more to avoid filing. While many attorneys and lawyers portray it to be an easy way out, it is not. The stress, depression, and depletion of my confidence was horrible. I felt like I was a loser, walking away from my debts and that I am no one. I recommend to all my friends and coworkers who have financial challenges to call you [CuraDebt] first and to do everything possible to pay back an agreed to amount instead of going for the hard route of bankruptcy. I want them to avoid the harsh emotional side effects I experienced and am still having to deal with”
Chapter 7 Bankruptcy Or Avoid Filing Bankruptcy And Use Debt Settlement?
Filing a chapter 7 bankruptcy instead of debt settlement might look easier. But our job at CuraDebt is to inform you so that you can make an educated decision. If you are looking to file chapter 7 bankruptcy then you are probably already behind on your debts or have recognized that paying minimum payments is not working.
You may even be getting calls from creditors. They might be calling you at work, and they might even be calling your family if they have their phone numbers.
The pressure to take immediate action is there. If you enter into our debt settlement program, our team will do everything possible to turn the creditor calls into violations which result in cash payments to you and/or debts dismissed.
Our expert and experienced negotiators would then resolve your debts as quickly as possible for the greatest savings to you.
CuraDebt Can Help!
Whether behind on payments or current on monthly payments people file for chapter 7 bankruptcy. Although debt negotiation seems the logical choice, our job at CuraDebt is to inform in an unbiased way about your various debt relief options.
At CuraDebt we have been helping people just like you since the year 2000. People who are not bad, but have just come into a financial crisis.
At CuraDebt we have hundreds of five-star ratings on online review sites and are rated among the best debt relief companies. And, in addition to unsecured debt, we also can help with tax debt relief.
Contact one of our counselors today at 1-877-850-3328 and find out why we have such stellar ratings.
More Five-Star Reviews In Customer Lobby Than Any Other Debt Relief Company
CuraDebt has received more Five Star reviews with testimonials in Customer Lobby than all other debt settlement companies. Here is one of hundreds:
“CuraDebt is the best alternative to filing bankruptcy. I wish I had known about this service several years ago.
Everyone is very courteous and friendly and very much customer oriented. You listen to the customers and that makes the big difference. I would definitely recommend CuraDebt to my friends and family. Thank for you, thank you.”
– Victoria C. Greenville, NC
See more CuraDebt reviews on Customer Lobby. Customer Lobby is a highly rated 3rd party company that allows clients of a company to post verified and authentic reviews. Their reviews are from real clients and their rating is from 0 stars being the lowest and 5 being the highest.