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What should you know about Chapter 7 bankruptcy?

On Behalf of | Sep 20, 2021 | Chapter 7 And Chapter 13 Bankruptcy |

Many people have a false perception of bankruptcy as a sign of failure or financial inexperience. The reality is that when unplanned hardships like personal injuries, severe illnesses and job loss happen, bankruptcy offers hundreds of thousands of Americans a way to control their finances again. To help you decide if bankruptcy may be right for you, you can find the answers to some of your early questions here:

Does filing for Chapter 7 bankruptcy mean I will lose my home?

Not at all. Part of the Chapter 7 process does require an applicant to sell some of their assets, but only non-essential ones. An applicant will be able to keep their primary home, primary vehicle and other essential assets.

What kind of debt can bankruptcy discharge?

There are two forms of debt: secured debt and unsecured debt. Secured debt is any form of debt with a type of collateral attached, such as a home loan or car loan. Unsecured debt does not have any collateral, such as medical debt, credit card debt and unpaid utility bills. Bankruptcy will be able to discharge the unsecured debt you may have. However, while student loans do not have collateral attached to them, bankruptcy cannot discharge that debt.

Do I qualify for bankruptcy?

Not everyone can reap the benefits of bankruptcy. Applicants will need to pass the Chapter 7 Means Test to determine if they are eligible. This test looks at the applicant’s debt-to-income ratio to determine whether or not you are able to pay your own debts.

How long will it take to get rid of my debt?

There is some variation in how long it will take to get rid of your debt. There are a lot of steps between deciding to file for bankruptcy and actually discharging your debt. With the help of an experienced attorney, you can discharge your unsecured debt within four to six months.  

Where do I start?

If you are considering filing for bankruptcy to take back control over your finances, consult with an experienced bankruptcy attorney right away about what options you have. Their guidance can help you find your way through the bankruptcy process and move toward a future you can look forward to.

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