Chapter 7 bankruptcy is the most popular form of bankruptcy, mainly due to its ability to quickly relieve debtors of unsecured debt, along with other advantages such as allowing them to hold on to some of their belongings as they escape their obligations to creditors. Filing for bankruptcy gives you a second chance at rebuilding your finances. If you are in pressing debt, talking to an experienced bankruptcy lawyer can help you determine if chapter 7 bankruptcy could be right for you.
Unfortunately, many people are afraid of filing for bankruptcy due to misconceptions surrounding the process, so it is important to set the record straight on how the process works so you can overcome your reservations and possibly gain financial freedom.
Filing for bankruptcy will lead to loss of all your property
This is the most feared aspect of filing for bankruptcy, as debtors often think that their assets will be liquidated to pay outstanding debt. While it is true that there is usually a bankruptcy sale where some assets are liquidated and used to clear debt, most of your important assets are usually protected from repossession or sale.
Assets such as your home, car, and personal belongings are usually exempt from any sale, and remain inaccessible to creditors for liquidation. Other non-exempt assets may be liquidated to help clear your debts, but filing for chapter 7 bankruptcy definitely won't leave you with anything.
After filing for chapter 7 bankruptcy, you will be discharged from all debt that is not secured by collateral, including credit card debt and outstanding medical bills. Other secured debts such as your mortgage or car loan are not discharged, but the bankruptcy should free up enough of your resources to help keep payments current so as to escape repossession.
You will never access credit again after filing
While filing for bankruptcy may make you look unattractive to creditors, it will not permanently damage your ability to obtain a new line of credit after the bankruptcy is discharged
Chapter 7 bankruptcy usually remains on your credit history for many years, effectively lowering your credit score. This usually makes it difficult to obtaining new credit from credit card companies and banks. You may also have to pay higher interest rates on new debt post filing, as creditors will question your ability to service new debt.
However, you can build your credit score shortly after being discharged from bankruptcy through making timely repayments or avoiding unnecessary high interest debt, and become more attractive to lenders once again. For assistance, talk to a lawyer like FactorLaw.
After being involved in a serious auto accident with a drunk driver, I struggled heavily with getting the driver's insurance company to open a claim. When the insurance company started pushing back, I knew I needed to do something. I spent a lot of time digging through the laws surrounding auto accident claims so that I knew what my legal rights were. I even talked with an auto accident attorney. I created this site to teach others about what I learned, including my court experience. I hope it helps you to determine how you should proceed with your auto accident case.