Sometimes, debts can become overwhelming. If you find yourself unable to pay off your bills on time and feel as though you are floundering financially, then there is no need to stress any longer. Know this: by filing for Chapter 7 bankruptcy, you can escape creditor harassment, halt repossessions and foreclosures, and eliminate your unsecured debts. Even though bankruptcy is typically tagged with a number of negative connotations, it can actually benefit you greatly.
The Means Test
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Before you can file Chapter 7, you must first determine whether or not you qualify for this form of debt resolution. The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), passed in 2005, established the means test as a method of weeding out Chapter 7 applicants who actually have enough money to pay off large portions of their debts. Those who do not qualify under the means test can instead file for Chapter 13 bankruptcy.
If your monthly income falls beneath the median income of your state, then you automatically qualify for a Chapter 7 filing. However, if it does not, then you must take the means test, which examines your income minus certain deductions. If you pass the means test, then you can file Chapter 7.
The Liquidation Process
Chapter 7 bankruptcy is also known as liquidation bankruptcy because those who file for this form of debt resolution must liquidate, or sell, parts of their estates. Their property will be divided into what are known as exempt and non-exempt items. Everything that is non-exempt will be sold. The money gained from these sales will be used toward paying off what the debtor owes.
Typically, non-exempt assets include second cars and homes, extra cash, stocks and bonds, expensive musical instruments, valuable collections of any kind, and pricey jewelry.
The Benefits of Chapter 7 Bankruptcy
Chapter 7 bankruptcy provides a number of immediate benefits for its filers, including the elimination of all unsecured debts (such as credit card debt), the halting of creditor harassment and foreclosures, and the prevention of repossessions. Once your secured debts have been paid off, you essentially start from scratch, financially, with the exception of your credit rating, which can be rebuilt over time.
Contact Us
If you are tired of your current financial situation and are ready to relieve yourself of your stress and worries by filing for Chapter 7 bankruptcy, then Birmingham bankruptcy lawyer Paula Greenway can help.
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