Chapter 7 Bankruptcy Advantages

If you are considering declaring bankruptcy as a way to get rid of your massive debt, you may be wondering which chapter is the best one for your situation. You should talk to a lawyer about this decision before choosing, but it is a good idea to consider the advantages of one of the most popular chapters, which is chapter 7 bankruptcy. 

The minute you file, you get an automatic stay. This means that creditors have to stop contacting you for payment. This means no more phone calls or threatening letters for a while. If you are worried about your car getting repossessed or your home being foreclosed on, you get a little reprieve when you file. This allows you some time to think about your options, and also lets you talk to your lawyer about what to do. Usually, the automatic stay is lifted once the chapter 7 bankruptcy has been completed, but this option gives you weeks or even months of a break from creditors. 

In many cases, you can keep some of your major assets after filing. For example, you may be able to keep your house if it is your primary residence, allowing you to avoid becoming homeless. However, if you have lots of equity in it, your trustee may sell the home and take most of the proceeds, so talk to your lawyer to find out your chances of keeping it. In addition, you can keep one car as long as you can show that you need it to get to work. Any other cars, or those that are particularly luxurious, may be sold off to pay back creditors. You may be able to keep these items, however, if you are able to offer the trustee a sum of money equal to what they would get by selling them. Therefore, it is possible to keep some of your assets, but you have to make some tough decisions since you can only keep so much. 

Of course, filing chapter 7 bankruptcy allows you to start over financially. Unlike some other chapters, you do not have to pay back your creditors with a payment plan. Instead, most of your nonexempt assets are sold, and the profits go to pay back your debts. Once your trustee runs out of items of yours to sell, you are done repaying debts and can start over. This means that your credit can begin to recover gradually, and you will be rid of many of your monthly bills. 

If you are unsure if this is the best route for you, talk to a lawyer before filing. A legal representative can tell you the perks for your particular situation, as some people benefit more than others. For example, if you have lots of assets to lose, then you may consider chapter 13 instead so that you can keep most of your items. However, if you do not have much to lose, and would like a fresh start, this is probably the best route for you.