Bankruptcy

What are the benefits of Chapter 7 Bankruptcy

By
David F. Mills
on
September 23, 2019

The most important benefit of Chapter 7 is the discharge and forgiveness of your debt. For many families suffering from the high cost hospital bills or unemployment, Chapter 7 will provide much needed financial relief.

In a Chapter 7 bankruptcy, a debtor can get most or all of his or her debts forgiven. Chapter 7 bankruptcy is a process in which a trustee is appointed by the court to sell certain property valued above a statutory threshold to pay the debtor’s creditors. In most cases, however debtors who file for Chapter 7 bankruptcy are able to keep their property.

Who Can File For Chapter 7 Bankruptcy?

If you are struggling to pay your bills, Chapter 7 bankruptcy may be right for you. In many cases, people who file Chapter 7 bankruptcy are experiencing financial hardship from unemployment, underemployment, or disability.

Some debtors are not able to file for Chapter 7 bankruptcy because their income is too high. Those whose income is greater than certain levels will have to file Chapter 13 bankruptcy, which restructures debt for payment over the course of three to five years. Don’t assume that your income is too high for Chapter 7. Your bankruptcy lawyer can help you make that determination.

There are some limitations to filing for Chapter 7. A person who has received a Chapter 7 discharge (forgiveness of debt) in the last eight years, for example, will not be allowed to discharge their current debt in Chapter 7 and may need to seek a discharge through Chapter 13.

Each case is different, and you should seek the advice of a bankruptcy attorney to determine if Chapter 7 is right for you.

What are the benefits of filing Chapter 7 Bankruptcy?

“Automatic Stay” on Debt Collection

One of the immediate benefits of filing Chapter 7 bankruptcy is an automatic stay on all creditors. In effect, your creditors are legally prohibited from attempting to collect on the debt you owe. They can’t even call you once you file your bankruptcy case. Once Chapter 7 has been filed, you will only pay those debts you and your attorney decide have to be paid, based on your priorities. Courts may make an exception, however, for creditors who are seeking to repossess secured collateral.

The Chapter 7 Discharge

The most important benefit of Chapter 7 is the discharge and forgiveness of your debt. For many families suffering from the high cost hospital bills or unemployment, Chapter 7 will provide much needed financial relief.

However, certain categories of debt cannot be discharged in bankruptcy. For example, most student loans, alimony and child support are not dischargeable under Chapter 7.

Upon the conclusion of a Chapter 7 filing, your credit will be impacted, sometimes for the better. Though Chapter 7 will affect your creditworthiness, it may not be as significant as the collections actions you are currently facing.

The Chapter 7 process is actually quite quick. Most Chapter 7 bankruptcy cases are resolved within six months. Chapter 7 does not involve a structured repayment plan.

Fresh Financial Start

For many families in North Carolina experiencing unemployment, low wages, medical bills, high cost of prescription medication, and disability, Chapter 7 may help eliminate crushing debt and allow a fresh financial start.

Hire A North Carolina Bankruptcy Attorney

If you are considering Chapter 7 bankruptcy, then you should seek the advice of a bankruptcy attorney. Your bankruptcy attorney will ask to see your pay stubs and debt related paperwork from creditors, even those that you dispute. Together, you and your bankruptcy attorney can look at your income and debt to determine which course of action is best for you.

If you have any questions about bankruptcy, or are considering filing for bankruptcy, contact Mills Law today to schedule a consultation with a qualified North Carolina bankruptcy attorney.

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