Chapter 7 bankruptcy allows citizens to discharge their debt. The process is called asset liquidation because the assets of the individuals are sold to pay back creditors. However, numerous protections remain in place to prevent the loss of all assets, especially those necessary to enable the individual to start a financially successful future. Although many individuals qualify for this, some do not take advantage of it because of the numerous myths about the process. Those who are facing financially difficult times, regardless of why that is, may wish to contact an attorney to discuss their options.
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Do You Believe These Myths?
In Chapter 7 bankruptcy, individuals request the court to grant them a discharge, which means they no longer have to pay back the funds included within the filing. When you go bankrupt, there are consequences. Yet for some, it is the best way to start a strong financial future. Don't believe these common myths.
1. You will lose your home. Under state and federal law, some assets have protection, depending on the value. For those with a high amount of equity in their home, it is possible the trustee will force the sale, but this is rare in most cases.
2. It is too expensive. Consumers must pay their attorney fees and filing costs upfront prior to filing. The cost ranges significantly. However, most attorneys allow individuals to pay over a period of time.
3. All types of debt qualify. That is not the case because federal income tax debt, student loans, and child support and alimony are non-dischargeable. These will remain after you file.
4. It ruins your credit forever. This is a public action and as such it will be reported on your credit report. However, it remains there for just 10 years. Additionally, those who are unable to meet their financial obligations right now may be better off filing in the long-term, especially if they cannot pay off their debt within the next three to five years.
5. Everyone will know. Again, it is a public record, but what is different here is that unless you tell people about it or they follow court records closely, they will not know.
6. You will lose your family collectibles. Most states have specific allowances for various types of assets to protect them. As long as the value remains under the state-appointed threshold, you should be protected.
7. It takes too long. Most cases process within two to three months. You could be debt free by that time.
Chapter 7 bankruptcy is an opportunity to finally get the financial help you need. Do not put off the opportunity that this could provide for you. Instead, take steps to move towards this process by speaking to an attorney about your situation.
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