Debt is an issue that many people struggle with, and whatever the cause may be, it can take a toll on even the most strong-willed individual. There is a solution to the problem, which is filing for Chapter 7 bankruptcy. Though it does not sound like something that can offer relief, the reality is that any medical or credit card debt, among others, will be “discharged,” and the harassing phone calls and letters will top immediately after filing.
Before deciding to file for Chapter 7 bankruptcy, it is important to understand the mechanics of the process. To begin, your financial information will need to be accurately gathered by a lawyer. An individual called a bankruptcy trustee will then be allowed to ensure assets are dispersed to those who are owed, though with Chapter 7 bankruptcy, that usually does not pertain to property, including cars (up to a certain amount), an amount of home equity, and things such as furniture.
Chapter 7 Bankruptcy Basics
The aforementioned discharge is the most important aspect of Chapter 7 bankruptcy, and what allows people to begin anew. The discharge bars collectors from attempting to accumulate any more discharged debt. Should a creditor attempt to collect after that point, sanctions can be filed against them, another aspect of Chapter 7 bankruptcy that works in your favor.
It should be noted that not everybody will qualify for Chapter 7 bankruptcy, as it is a means to an ends solely for individuals who have no realistic way to pay their debts. In order to ensure this, a discharge will not be allowed unless you take what is called a “means test.” This is a calculation of various factors which will determine your qualifications for Chapter 7 bankruptcy, and include having an income below the median for the state you live and the number of people you live with, as well as figuring out how much disposable income you have.
How Chapter 7 Bankruptcy Works
Chapter 7 bankruptcy has one purpose, and that is to allow people who have an amount of debt they simply cannot pay off to start over financially. The reason for the debt is inconsequential, what matters is that a new beginning is possible, and though the road will not always be easy, it will be worth it in the end. Filing for Chapter 7 bankruptcy may just be the first step down the path to a new life.