Filing for bankruptcy under chapter 7 is an effective way of eliminating debt that is unsecured. It provides consumer debt relief in as little as 4 to 6 months, without having to make any further payment to your creditors.
New 2005 Bankruptcy Code
Despite the fact that the bankruptcy law was changed in 2005, this isn’t necessarily an obstacle to proceeding. With in excess of one million people filing chapter 7 each year, it’s clear that those who need to file chapter 7 still can. You need to gather some bankruptcy help.
Since the alteration to the code, it’s necessary to comply with a strict means test. The basic rule is that earnings for the last 6 months will need to be below the median for your state. There are other ways that you can qualify, but they are more involved. Most people who file chapter 7 hire the services of an attorney, and this costs about $2,000.
When you’re finding it hard to get by each months, it can be difficult to find the cash. However, you’ll benefit from professional advice from someone who has considerable experience and knows all of the ins and outs of the system. If you’re concerned or unsure whether chapter 7 is the right debt-free solution for your situation, their support can be invaluable.
Have you Filed for Bankruptcy Before?
If you’ve filed chapter 7 during the last 8 years, you cannot file more than once within this timeframe. You’ll need to look for an alternative debt relief program, such as chapter 13 bankruptcy or a debt settlement program. If you’ve got some income that you can afford to pay your creditors, this isn’t a problem. However, if you’ve been made redundant or have fallen ill, it can be hard to raise enough cash to satisfy the requirements of your creditors.
Don’t Lose Items of Value
Although you don’t need to surrender your home and life essentials, non-exempt assets must be given to a court-appointed trustee. These are not limited to a expensive car, second home or valuable collection. Your assets will be realized and the proceeds disseminated to your creditors on a pro rata basis. People file for bankruptcy under chapter 7 to protect assets that would otherwise be lost. In return for a contribution each month, most creditors will allow you to keep certain possessions. However, you’ll need to keep-up with the monthly payments for a 3 or 5 year period.
Creditors Cannot Contact you for Repayment
Despite these negatives, you will be afforded full court protection from your creditors. These mean that they aren’t permitted to contact you, unless they’re reaffirming debts, such as your mortgage or car loan. You aren’t able to eliminate secured debts, but you can normally keep them through a separate arrangement. If the collateral has already been recovered, you can eliminate any deficiency. You cannot clear debts, such as child support, alimony, student debt and money that you need to pay to the Internal Revenue Service.
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