In spite of Chapter 7 bankruptcy being a widely popular method for resolving debt, unfortunately not everyone qualifies to use it. Your income will be evaluated if you make more or less than the average for a household your size. If you make more, you must pass a means test that identifies your eligibility based on your disposable income.
Only Certain Debts Are Discharged
Chapter 7 bankruptcy is designed to discharge unsecured debts. This means Chapter 7 bankruptcy works well for people who have the majority of their financial burden wrapped up in things such as:
- Credit cards
- Medical bills
- Personal loans
- Legal fees
Unfortunately, there are debts that won’t be forgiven which include:
- Student loans
- Child support
- Car loans
- Certain tax obligations
Chapter 7 Bankruptcy Has Property Exemptions
One of the biggest misconception’s debtors have about filing for Chapter 7 bankruptcy is that they will lose all their assets. The truth is there are property exemptions that prevent this from happening. A bankruptcy attorney will discuss which property exemptions you qualify for and what steps you must take to keep your assets safe.
Filing for Chapter 7 Bankruptcy Is a Process
Because Chapter 7 bankruptcy removes so much debt, there is quite a bit of paperwork involved when filing a Chapter 7 bankruptcy. Your bankruptcy attorney will assist you in gathering all the information you need to ensure you aren’t missing anything the court requires. Once you’ve submitted your petition to the bankruptcy court, it’s likely you will need to attend a meeting of your creditors before you can receive your discharge orders.