Chapter 7 bankruptcy is a form of liquidation bankruptcy that may help you get out of debt and back into a more financially secure position in your life. Chapter 7 bankruptcy is great for dealing with issues such as judgments, lawsuits, co-signer debt liability, medical bills and credit card debt.
When you choose this kind of bankruptcy, you may be asked to liquidate some of your assets, but for the majority of people, there are exemptions that help them protect much of what they’ve earned for themselves over the years. With the right help, it may be possible to go through bankruptcy without liquidating anything at all.
What happens when you file for Chapter 7 bankruptcy?
When you file for Chapter 7 bankruptcy, the first thing that happens is that an automatic stay goes into place. An automatic stay makes it so that creditors may no longer seek out payments during the bankruptcy. They are also forced to stop collections activities, so that you don’t have to continue receiving harassing phone calls or letters.
If you do get called after starting a bankruptcy or are contacted through other means, it’s important to tell the agent that you’ve entered into bankruptcy and to reach out to your attorney instead.
Does Chapter 7 bankruptcy eliminate credit card debt?
Chapter 7 bankruptcy eliminates unsecured debts in most cases. This means that debts such as credit card debts or medical bills may be eliminated through Chapter 7 bankruptcy. There are exceptions, but for the most part, any unsecured debts can be discharged through bankruptcy.
Do you have to qualify for Chapter 7 bankruptcy?
Yes, you do have to qualify through a means test. This test determines if you have enough money to pay your creditors or not. If you fall below the median income level in Texas, then you will qualify automatically. If you do not fall under that level, then you have to meet the means test requirements set by the Internal Revenue Service.
Chapter 7 bankruptcy could be the right answer for your financial concerns. This and other forms of bankruptcy are available to help people in debt.