Many people think of bankruptcy as a signal of failure. In reality, you’re recognizing that it’s time to make a change. That’s admirable and the right mindset as you begin to get your financial life in order.
Chapter 7 bankruptcy protection gives individuals a fresh start. It’s important that you work with a skilled and experienced bankruptcy lawyer to help ensure your filing is accurate.
What is Chapter 7 Bankruptcy?
People usually refer to chapter 7 bankruptcy protection as a clean slate. This is the case because, if approved, the court wipes all of your unsecured debts clean. When you are way behind on bills and cannot make even your minimum monthly payments, Chapter 7 might be a good option for you.
Will I Give up any Possessions?
You might have to, yes. Under Chapter 7, your debts are completely wiped out and discharged. However, you may have to give up some of your possessions to complete your Chapter 7. This happens because the bankruptcy trustee will sell some of your assets to pay back some of your creditors.
When you file Chapter 7, the court will appoint a trustee to your case. They will review your finances and sell certain items to pay your creditors. Some property will be exempt and the trustee will not be able to sell it to pay your debts. But be prepared to give up many items in an effort to reduce the amount you owe to your creditors.
What are Property Exemptions?
Every state provides different types of exemptions to bankruptcy. Generally, you can expect to keep the possessions that allow you to go about your day to day life. These may include:
- Your home
- Your car (up to a certain amount)
- Medical supplies
- Retirement accounts
You may also be able to retain family heirlooms in certain circumstances. To know for sure what is and is not exempt for your bankruptcy, speak with a trusted bankruptcy attorney today.
What Debts go Away Under Chapter 7?
The bankruptcy trustee will sell many of your items to reduce the amount of debt you owe. Most debt comes in the form of credit cards, medical bills, and other unsecured personal loans.
But there are some debts that cannot be discharged under Chapter 7 bankruptcy protection. These include:
- Child support
- Student loans
- Some tax debt
- Court fees
How Long Does Bankruptcy Stay with Me?
When you file bankruptcy, you must know your financial life is changing. Filing bankruptcy is not giving up, however, it’s simply starting over.
But it might take some time before you can secure credit again for major purchases like homes or cars. When you file Chapter 7 bankruptcy, that will stay on your credit report for 10 years. Chapter 13 bankruptcy stays on your credit report for 7 years.
Don’t let this time scare you. The sooner you determine which path is right for you, the sooner you can start the clock and get back to your financial well being.
An Attorney Can Provide You the Guidance You Need
We can answer all of the questions above and the countless others you may have. Do not settle for a one size fits all solution. We provide you with a bankruptcy protection path that is unique to your situation. Contact a bankruptcy attorney, like a Bankruptcy Law Firm Memphis, TN, today to get started.
Thank you to the experts at Darrell Castle & Associates for their input into bankruptcy law.