Chapter 7 is by far the most common type of personal bankruptcy filed, and for good reason. It's fast, effective and far less complicated than other types. Often, people fear a chapter 7 due to the possibility of losing their valuable property. You should know, more people will not lose any property in a chapter 7.
#1: You Lack a Regular Income.
Chapter 7 is a liquidation plan. This means that all "non-exempt assets" are liquidated in order to pay off your creditors. As a result, ch 7 bankruptcy is an option for those who do not know where or when their next checks will arrive, including: the unemployed, underemployed, and/or disabled. Unless you have significant non-exempt assets (like a second home or a boat) you don't need to worry about losing and property.
#2: You Have a Significant Amount of Debt.
When you have a large amount of debt you cannot pay, Chapter 7 Bankruptcy may be your best option. Chapter 7 does not have a limitation on how much debt you are allowed to eliminate.
#3: You Desire a Quick Resolution.
Chapter 7 Bankruptcy is designed to be a relatively quick process, sometimes taking only 3-4 months to obtain a discharge from the court. The process is to allow you to keep enough of your personal property to have a chance at a fresh start.
#4: Your Assets are all Exempt Assets.
If all of your assets are considered to be "exempt," your case will be filed as a "non-asset" case. This means that you may be able to obtain a discharge of debt without losing any of your possessions.
Certain assets are considered "exempt" from liquidation under the federal Bankruptcy Code. Some states have granted additional exemptions to certain assets. When you file for Chapter 7 Bankruptcy, you are allowed to keep your "exempt assets."
#5: To Stop Harassing Phone Calls and Other Collection Actions.
When you file a petition for Bankruptcy, you are granted an "automatic stay." This means that harassing phone calls, wage garnishments, repossession, utility disconnections and collection notices must cease. While this "stay" is not necessarily permanent, it can offer you some peace while you get your finances in order.
If you think Chapter 7 Bankruptcy is right for you, contact a bankruptcy attorney for more information and advice.
