When a person has too much bad debt that he or she cannot manage, one of the few options that may be considered is filing a Chapter 7 bankruptcy. While this option may have a few disadvantages, the benefits outweigh the demerits by far. A person should hire an experienced bankruptcy lawyer to ensure that he or she gets all the benefits that this option has to offer.
Chapter 7 Bankruptcy Explained
This is the most common type of bankruptcy in the U.S. A bankruptcy petition can be filed with the federal court by an individual or a company that is unable to service its loans. If the court grants the petition, an interim trustee will be appointed to liquidate the assets of the debtor to repay all creditors. The debtor will therefore be discharged from all debt except child support expenses, student loans, property taxes, fines, spousal support and income taxes. The entire process normally takes 4 to 6 months.
Benefits of the Chapter 7 Bankruptcy
There are many benefits of this type of bankruptcy. A bankruptcy attorney will make sure that the petitioner enjoys all the benefits. The following are some of the benefits.
Creditors Can’t Touch You
If the bankruptcy court grants your request, your creditors will be breaking the law if they attempt to communicate to you in any way. All communication must go through the court appointed trustee. This means that the Chapter 7 will give you peace of mind by freeing your from debt collectors and creditors. The phone calls and threatening emails will stop as soon as the court makes public its decision.
Cost Effective Option
While the bankruptcy may reflect on your credit report for many years, this option is by far the cheapest alternative. Filing the Chapter 7 will cost you only $299 and you only have to appear in court once. This amount will cover all filing and administrative fees.
Easy to File
Filing a Chapter 7 bankruptcy involves filling out numerous forms and filing them with a bankruptcy court. A bankruptcy lawyer may be useful at this stage. You will be required to declare your estate, debts, monthly income and expenses, property sold or given away in the last 24 months, money spent in the last two years and the properties you claim the law allows you to retain through the chapter 7.
You can Keep Some Non-Exempt Properties
The main objective of the bankruptcy trustee is to liquidate non-exempt assets and forward the amount recovered to all your creditors. However, if you have some non-exempt properties that may be cumbersome to liquidate, the trustee might let you keep them.
Complete Control over Future Income and Property
After the trustee has liquidated all non-exempt properties and repaid your creditors, you will be free to do whatever you want with income or property you acquire afterwards. This means that you can start afresh. Hiring a bankruptcy attorney is recommended because legal advice is important when choosing whether to file a chapter 13 or chapter 7 bankruptcies.
The Fresh Start
After the chapter 7, you can start your life with a clean slate. You will be free of most of your debt while the remaining debt will be manageable. Since future incomes and assets cannot be touched by the trustee, you will be able to start rebuilding your life. With the debt burden lifted off your back, you will be in a better position to manage your finances and avoid getting back into the same trap. The court mandated debt counseling will also increase your money management skills. Any descent bankruptcy attorney can tell you that the chapter 7 has many benefits. There are hundreds of thousands of Americans who have had a fresh start, thanks to the Chapter 7 bankruptcy.