When collectors begin overwhelming your voicemail and mailbox, the pressure can build driving you to seek out means of relief. That search often leads to research into what bankruptcy is and how it can help you rebuild your credit and your peace of mind. The United States Bankruptcy Code offers two options for dealing with overwhelming personal debt. Filing under Chapter 7 of the Bankruptcy Code can offer greater relief, but there are several factors that determine whether you are eligible to file for Chapter 7 Bankruptcy.
What is Chapter 7 Bankruptcy?
Chapter 7 Bankruptcy a chapter of the Bankruptcy Code which allows individuals to relinquish certain assets in exchange for debt elimination and repayment. A Trustee of the court liquidates all of your non-exempt assets. The Trustee will then repay you, the debtor, any exempt amount and repay your creditors from the remaining funds. Through this process, you are able to completely eliminate many debts, which can allow repayment of other debts more easily.
Can chapter 7 bankruptcy eliminate ALL my debt?
No. There are some debts, which cannot be discharged through bankruptcy.
- Child Support
- Student Loans
- Fraudulent Debts
- Debts for injury or death caused by driving while intoxicated
- Fines and penalties for violation of the law
There are many other exceptions, and only an experienced bankruptcy lawyer can truly help you know which of your debts are eligible for discharge.
Do I have the means?
One of the ways the court determines if you are eligible to file Chapter 7 Bankruptcy is by requiring higher income filers to take the Bankruptcy Means Test. Your attorney will consider all of your income and assets to determine if you will need to complete the test. All this entails is inputting your income, assets, and various other information into a complex calculator that will determine if you have the means to repay any portion of your unsecured debt. This test simply helps the court recognize whether individuals should file for Chapter 7 or Chapter 13 Bankruptcy.
Will I lose everything?
When discussing liquidation of assets to repay creditors, it can sound very scary to the person filing. There may be concerns about losing a home, furniture, or transportation. The Court understands that you will need these things to continue to live, and it is not the goal of the Trustee to leave you homeless. This is why the Trustee, an impartial party, is appointed by the Court to oversee the case. The Court may allow for reaffirmation of secured debts such as homes and vehicles. There are several things which determine whether you can reaffirm these debts:
- The debt, or your equity in the property, is exempt.
- Sign a Reaffirmation Agreement – This is an agreement that you sign voluntarily stating that you intend to repay the debt as previously agreed.
- Bring payments up to date – Creditors must agree to the reaffirmation, and most will not if payments are not caught up.
- You cannot bankrupt that debt for another eight years.
Given these stipulations, some prefer to simply start over, but many find that, once they have caught up on their secured debt and eliminated unsecured debt, keeping up payments on their home and vehicle is much easier.
Your attorney is here to help!
The Bankruptcy Code is long and complicated. With so many exceptions, exemptions, and exclusions, it is important to have an experienced bankruptcy attorney working for you to walk you through the process. At Hall & Navarro, our team has decades of experience with bankruptcy cases of every kind. If you are still unsure of whether bankruptcy is the right choice for you, take a moment to complete our Free Bankruptcy Case Evaluation then call our offices to schedule your consultation. Let the legal team at Hall & Navarro help you find the peace of mind you’ve been searching for.