The Basics of Chapter 7 Bankruptcy

No one sets out in life thinking, “Gee, I can’t wait to file bankruptcy.” However, there are many circumstances which can lead to dire financial consequences. Whether it’s a loss of income because of a job lay off, medical expenses or a messydivorce there might come a time when filing for bankruptcy is the only viable option left open.

In terms of personal bankruptcy, there are two options for filing: Chapter 7 or Chapter 13. In either case you’ll need the help of an experience Westchester bankruptcy attorney. This is because a bankruptcy can only be awarded by a judge in a court proceeding. The following is a list of the benefits of filing a Chapter 7 Bankruptcy:

1. The Fresh Start: A Chapter 7 is often referred to as the “Fresh Start” of bankruptcies because it allows you, the debtor, to wipe out certain debts. This doesn’t mean you’ll be completely free and clear. You’ll still be obligated to make payments to student loans, child support, alimony and specific owed taxes. If there are liens against property they will remain in effect but at least you’ll have some “breathing room” from a mountain of debt to start and rebuild. And yes, that “breathing room” means all those annoying phone calls from creditors will stop.

2. You Get To Keep Future Earnings: With a Chapter 7 filing, you will be able to hold onto future earnings or property acquisitions. In other words, you won’t have to turn those over to your creditors. Keep in mind, that if you are going to make a major asset purchase you’re better off waiting 180 days after the filing. Anything acquired within that time could be applied towards the pay down.

3. No Debt Limit: Unlike a Chapter 13 filing, with Chapter 7 there isn’t a limit on the amount of debt you can file to have eliminated. Your Westchester bankruptcy lawyer can review all of these limitations with you in your first consultation meeting.

4. No Repayment: If a Chapter 7 bankruptcy filing is granted you won’t be setting up a repayment plan with all your creditors. The debt will be officially discharged and you are no longer responsible. That doesn’t mean you’re totally free and clear. This filing will be part of your credit history for the next seven years. That is going to make it extremely difficult for you to secure an affordable loan for a car or home.

5. Quick Turnaround: After you file for a Chapter 7 you might only have to wait up to 90 days for a ruling. This will allow you to get back on track a lot more quickly.
A bankruptcy should never be looked at as the end of the line but instead of a new beginning. You will have limits on achieving credit but in the long run that might be a better way to set up a stronger financial future. If you only pay for what you can afford then you can begin to save for retirement, tuition or insurance. Are you ready to put your debt behind you?