Chapter 7 Bankruptcy: An Overview
Posted in: Bankruptcy Law, Chapter 7 Bankruptcy Law
If you are facing financial difficulties and struggling to make ends meet, filing for bankruptcy may be your best option to help you get back on your feet and eliminate your debt. Chapter 7 bankruptcy is the most common type of bankruptcy that allows you to discharge your unsecured debt, such as credit card debt and medical bills. If you live in Chicago or Cook County and need an attorney specializing in bankruptcy law, you are at the right place. At DebtPros, our experienced lawyers will help guide you through the bankruptcy process and determine if Chapter 7 is right for you.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is a type of bankruptcy intended for people who have little or no disposable income every month to repay their debts. The purpose of Chapter 7 is to give you a fresh start by discharging your unsecured debts. When you file for Chapter 7 bankruptcy, a trustee is appointed to oversee your case. It is important to hire a bankruptcy lawyer who is familiar with the Chicago trustees. The trustee is responsible for selling any non-exempt assets to pay your creditors. In most cases, you get to keep all your assets or property.
You may retain your car or home in Chapter 7 in certain situations. For a car, you can keep it if you are current on the car note and sign a reaffirmation agreement. The reaffirmation agreement is a contract sent over by the lender spelling out the terms of your car loan. Sometimes, it is best to surrender your car if it is not affordable and eliminate the debt owed to the finance company. For a house, it is a similar process. However, it is normally advised that you do not sign the reaffirmation agreement because you can eliminate your personal liability on the note and keep the house as long as you make your mortgage payments.
How Does Chapter 7 Bankruptcy Work?
The process of Chapter 7 bankruptcy starts with a consultation with a bankruptcy lawyer. Your attorney will review your unique financial situation to determine if Chapter 7 bankruptcy is the right option for you. If you decide to proceed with filing, your attorney will assist you in preparing and filing your bankruptcy petition with the bankruptcy court.
Once your bankruptcy petition is filed, creditors are prevented from pursuing any collection efforts against you. This includes garnishing your wages, filing lawsuits, or even calling you. After the case is filed, a meeting of creditors is scheduled, which you must attend. During this meeting, the trustee will ask you questions about your finances and assets. Although creditors can also attend this meeting, they rarely do.
After the meeting of creditors, you must complete a debtor education course to receive your discharge. The entire process of Chapter 7 bankruptcy typically takes four to six months. If there are any unexpected issues that arise in your case, our Chicago bankruptcy lawyers are here for you to address any problems.
What are the Benefits of Chapter 7 Bankruptcy?
There are several benefits to filing for Chapter 7 bankruptcy, including:
- Discharge of Unsecured Debts: Chapter 7 bankruptcy allows you to eliminate your unsecured debts. The most common type of unsecured debts include credit cards, medical bills, and personal loans.
- Protection from Creditors: The automatic stay that goes into effect when you file for Chapter 7 bankruptcy stops creditors from pursuing collection efforts against you. This includes harassing phone calls, wage garnishments, or lawsuits.
- Fresh Start: Chapter 7 bankruptcy gives you a fresh start by discharging your unsecured debts. This allows you to start over and rebuild your credit.
- Keep Most of Your Assets: In most cases, individuals who file for Chapter 7 bankruptcy keep all of their assets, including their home and car.
Who Qualifies for Chapter 7 Bankruptcy?
To qualify for Chapter 7 bankruptcy, you must pass the means test. To pass the means test, you must make under a certain amount of money for the 6 months prior to filing for bankruptcy. If your income is above the median income for your state, you may not qualify for Chapter 7 bankruptcy.
In addition to the means test, there are other eligibility requirements for Chapter 7 bankruptcy, including:
- You must be a resident of the United States.
- You must have completed a credit counseling course before filing for bankruptcy.
- You must have not filed for Chapter 7 bankruptcy within the past eight years.
Call DebtPros Now for a Free Consultation!
If you are being harassed by creditors or overwhelmed with debt, Chapter 7 bankruptcy may be your best solution to get a fresh start. When you call our Chicago office, you will speak directly with a bankruptcy lawyer who will discuss whether you should file bankruptcy or not. Do not wait to call!