Chapter 7 Bankruptcy FAQs
Chapter 7 bankruptcy is the most popular form of personal bankruptcy. In recent years, bankruptcy courts have seen roughly a million Chapter 7 filings per year.
But even though Chapter 7 is popular, there remain plenty of myths floating around about this type of bankruptcy. Listed below are some Chapter 7 bankruptcy FAQ's that may remove some of the mystery from this powerful form of debt relief.
Every case is different. Talk to a lawyer if you are thinking of filing for Chapter 7 to eliminate your debt:
Common Questions About Filing for Chapter 7 Bankruptcy
In a Chapter 7 bankruptcy filing, filers may be able to eliminate some or all of their unsecured debts, including credit card debt, payday loans, medical debt and utility bills.
How much does it cost to file Chapter 7? Court costs typically run up to about $300, while mandatory credit counseling classes are roughly $100. Some filers may be able to have their fees waived for various reasons. This is in addition to lawyer fees.
Can I file? What is the means test? The Chapter 7 means test determines a person's eligibility for Chapter 7. Usually, if filers have a relatively low income, they will be eligible for Chapter 7. Ask an attorney if you can "pass" the means test.
What if I don't qualify to file Chapter 7? Most people who want to file Chapter 7 can, but sometimes the court may decide they have too much income to file and instead they file a Chapter 13 bankruptcy repayment plan. Under this type of bankruptcy, people repay their debts in small monthly payments, usually for 3-5 years. If they pay their debt on time, the rest of their unsecured debt may be forgiven at the end of the repayment period.
What is the automatic stay? The automatic stay kicks in when you file and typically lasts for the duration of your bankruptcy. It is designed to stop wage garnishments, end collection lawsuits, and prevent aggressive creditors from harassing you.
Will bankruptcy affect my credit rating? Your bankruptcy will remain on your credit report for up to 10 years. But most people already have severely damaged credit when they file bankruptcy. In the end, if you are able to eliminate your debt through bankruptcy, it makes sense that you should be able to improve your credit score.
What property is exempt in Chapter 7? This depends on state bankruptcy laws. Many states exempt clothing, cars, livestock, and some cash from liquidation. In addition, Social Security benefits and other forms of government aid are often exempt. NOTE: Most people who file Chapter 7 do not have to liquidate any of their property.
How can an attorney help in a Chapter 7 case? Bankruptcy lawyers may help in numerous ways, including analyzing a people’s debts to determine if bankruptcy right for them, attending meetings of creditors, filing necessary paperwork, and guiding people through the complex bankruptcy process.
If some of these Chapter 7 bankruptcy FAQ's relate to your situation, know that many other filers may share similar concerns.
Connect With a Chapter 7 Bankruptcy Attorney
These Chapter 7 bankruptcy FAQ's listed above cover relatively broad Chapter 7 topics. For more detailed information on local laws, many filers prefer to speak with a local bankruptcy lawyer.
To ask more specific questions about your unique bankruptcy claim, contact a local bankruptcy lawyer today.