Reasons To File Chapter 7 Bankruptcy

The main reason to file Chapter 7 bankruptcy is when someone is broke (not to put too fine a point on it). It is a last ditch resort. Chapter 7 is filed when there really is no possible way that a person can pay off their debts over a period of time. A repayment plan (chapter 13) would be useless as there is no income or monies available to meet the obligations of any payment plan.

Chapter 7 bankruptcy, otherwise known as ‘straight bankruptcy’ involves the debtor turning over all their non-exempt available assets to their bankruptcy trustee who then converts everything to cash and distributes it amongst the debtor’s creditors. In the majority of cases the debtor doesn’t have any assets to surrender, meaning they can simply go straight to declaring themselves bankrupt and achieve a relatively fast ‘fresh start’.

Purpose Of Filing Chapter 7 Bankruptcy

One of the main reasons to file Chapter 7 bankruptcy is to wipe out someone’s debts, enabling them to have a new start, and is only ever utilized when the debtor’s debts have become utterly overwhelming and impossible to repay.

By filing for Chapter 7 bankruptcy all of your debts are wiped out, meaning those stressful and annoying phone calls and home visits will stop. Creditors cannot file any law suits against you, nor can they even continue calling to demand payment. They must simply wipe your debt and cut their losses.

Your spouse’s credit rating won’t be affected by your bankruptcy if they weren’t co-signers for the debt you’ve surrendered to, meaning you can file for bankruptcy without being concerned that your bad credit rating will have a knock-on affect to your partner’s.

The Credit Bureaus will keep your bankruptcy on file for ten years, and although the bankruptcy files are public records under most normal circumstances no one will know ou went bankrupt.

The most common causes for filing for Chapter 7 bankruptcy are:

• Unemployment
• Large Medical Expenses
• Extremely Overextended Credit
• Martial Problems
• Other Large Unexpected Expenses

According to a Harvard Study published in 2005, more than half of the bankruptcies in the USA were caused by Medical Bills, and that medical bankruptcy itself affects roughly 2 million people annually.

The only debts that aren’t cleared under Chapter 7 bankruptcy are any that you forget to list when you file for bankruptcy, as well as child support or alimony; debts imposed on you for injury or death caused by your intoxicated driving; student loans from the government; fines imposed for breaking the law; and any tax debts you may have. If you are struggling with any of these debts you should consult an attorney before deciding how to proceed.

Will Filing Chapter 7 Bankrutpcy Impact My Job?

There’s no need to fear losing your job over Chapter 7 bankruptcy, as under I.S.C. Sec. 525 any employer is prohibited against discriminating against you. Filing for Chapter 7 bankruptcy simply means your debts are cleared and you have a faster route to rebuilding your credit rating than via any other credit building option, such as credit counsellors.

Consider filing for Chapter 7 bankruptcy very carefully though, as you can only do it once every 8 years – meaning if you should fall into financial difficulties again then you may well be stuck for a solution.

Free Help If Your Are Thinking Of Filing Chapter 7

Filing for bankruptcy (any chapter) can be daunting.  Most people who go bankrupt never believed they would, always thought it happened to others and not themselves.  It is a very difficult time, and some tough decisions need to be made as the decisions you make during this time can have a long term effect on your future life.  There is good free advice available out there.  One of the best types of help that you can get is to have a free consultation with a bankruptcy attorney.  Now don’t be put off by this, or the fact that bankruptcy attorneys charge money for their services.

As part of their services most of them offer a good free consultation call, to help you decide whether bankruptcy is right for you or not.  Take advantage of this where it is offerred and use it wisely.  Be prepared for your call.  Have all your information ready like?

how much you owe?

who you owe it to?

what payments have you defaulted on?

what monies do you have coming in?

If you are well prepared you can get so much out of a consultation like this.  It does not matter if you are not going to use their paid services,  the call is worth it to them as you may use them further down the line, you may recommend them to another, either way it is a well spent 30 minutes for the attorney.

Further information on how to declare bankruptcy.

Bankruptcy Attorney And Lawyer Fees