Chapter 7 Bankruptcy: What You Need To Know

While it's common for people to say things like, "I went through that exact situation," or "You're not the only one," the truth is that very few financial situations are alike. While your situation may be very similar to someone else's, it doesn't mean there aren't peculiarities and combinations that make yours unique. This is why it can be difficult to determine exactly what you should do to solve your debt problems. Filing for Chapter 7 bankruptcy is one possible option, but there are things you should know before you move forward.

Professional Assistance

While it is possible to file for Chapter 7 bankruptcy without the help of an attorney, it isn't the recommended course of action. Paperwork for such an event can be complicated and tedious. Getting a filing through the court system can take a long time under the best of circumstances. If there are mistakes on your part, it will take much longer. You may be rejected for reasons that have little to do with your financial situation. If it is at all possible, hire a lawyer to make sure you stand the best chance of moving through the system expeditiously.

Income

Keep in mind that Chapter 7 bankruptcy isn't for everyone. There are restrictions on who can file and cannot. Your income will play a large part in determining which category you fall into. As opposed to Chapter 13, this form of filing largely absolves you of your debts. Therefore, it should come as no surprise that the courts want to make sure you really are unable to meet your burden. If you are filing because of individual debt, don't make the mistake of filing as a couple with your partner. This will increase the income on record and make it much less likely that you will qualify.

Possessions

The courts want to ensure that you make every effort to repay your debts. In some cases, this means the liquidation of some of your assets. If this is a major concern for you, you should know that there are exemptions. For instance, there is little chance that you will be forced to sell your home to repay the debts if you qualify for Chapter 7 bankruptcy. This is another reason why you should hire a lawyer. He will be able to tell you exactly which assets will be protected and which ones may need to be liquidated.

Credit

There's no question about it: filing for Chapter 7 bankruptcy will cause your credit rating to take a hit. It may be difficult to find financing or open credit cards in the next seven years. On the other hand, falling behind on your debts and incurring late fees, foreclosures, and repossessions will do the same, so if you're left with little choice, don't let the credit issue keep you from doing what needs to be done.