An Overview of Chapter 7 Bankruptcy
Today, millions of Americanís are drowning in debt, while countless others are upside down on their mortgage. Due to this sobering trend, debtors are turning towards Chapter 7 bankruptcy for serious relief.
Bankruptcy has been stigmatized for decades; however, it is perceived quite differently today. In the past, people who filed for bankruptcy were frowned upon as ďover spenders.Ē These days, debtors who file for bankruptcy are met with empathy, because nearly everybody knows somebody who is in financial distress.
How many people do you know that are out of work? You can probably name at least a few people who have been hit hard by the recession Ė whether itís your neighbor, your brother, or your friend. The numbers are sobering; everywhere you look, people are being laid off from their jobs.
When people arenít earning enough money to keep up with their living expenses, something has to give. Itís usually the unsecured debt, such as credit cards and cable bills, that go first. As the savings are depleted, people have to make important choices in their life. They have to differentiate between needs and wants.
Bankruptcy has existed for thousands of years in several corners of the globe. Chapter 7 bankruptcy in particular has afforded Americanís the ability to erase most unsecured debt from their record, so they can start anew. The amount of weight that is lifted off debtorís shoulders when they file bankruptcy is immeasurable to say the least. Chapter 7 bankruptcy debt relief has most certainly saved a few lives and marriages over the years.
How does Chapter 7 bankruptcy work? First of all, Chapter 7 bankruptcy is a debt liquidation bankruptcy. It is reserved for those individuals who really need it. The majority of people who file Chapter 7 bankruptcy do not have any assets, so they donít usually lose anything in the process.
What can be included in Chapter 7 bankruptcy? Debts such as credit cards, medical bills, utility bills, personal loans and certain taxes (over three years) can be included in bankruptcy. What cannot be included in a Chapter 7 would be student loans, spousal support, child support, recent taxes, court ordered fines and victim restitution.
The process from start to finish is relatively quick. A person can usually obtain a discharge within three to six months after the initial filing. Once their debts have been discharged, they can then focus on rebuilding their credit. With a good solid budget and timely payments, a person can re-establish credit within a few short years after filing for bankruptcy. In fact, for many debtors, their credit actually improves faster after a bankruptcy filing than if they never filed in the first place. Having a low debt-to-income ratio makes borrowers more attractive to lenders than if they were overburdened by debt.
As mentioned before, Chapter 7 bankruptcy is reserved for those who really need bankruptcy protection. For those debtors who want to protect a home from foreclosure or for those who have a steady source of high income they may be diverted to filing a Chapter 13 bankruptcy instead. Chapter 13 bankruptcy is considered the ďdebt reorganizationĒ bankruptcy. It gets that name because people pay off all or a portion of their debts over a three to five year time period in payments that they can easily manage and afford.
If you are considering filing for bankruptcy, you are urged to contact a seasoned bankruptcy attorney who can sit down with you and go over the specifics of your unique financial situation. A bankruptcy lawyer can help you by telling you what your next best plan of action should be.
ABOUT THE AUTHOR: Law Office of Marc Wagman
Law Office of Marc Wagman has been serving clients throughout the Chicago area for years. Their firm specializes in bankruptcy law; therefore, they have the tools and the experience to give you the direction that you so desire. As bankruptcy is an important decision to make, you want to make sure that you are fully informed as to what all of your bankruptcy options are, as well as your alternatives. A Chicago bankruptcy lawyer from their firm will be able to simplify the complex process for you. If you choose to go with their firm, you can rest easy knowing that they will do everything that they can to help you into a brighter future.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.