Chapter 7 Bankruptcy (Liquidation)
If you are struggling with the stress of financial problems, there is some relief available to you. You may be able to file for bankruptcy. Bankruptcy might be a good option, especially in some situations. There are two main types of bankruptcy available to individuals. These include Chapter 7 and Chapter 13 bankruptcies. Chapter 7 bankruptcy is considered a fresh start. It allows you to liquidate your assets, repay, and discharge your debts so you no longer owe them. If you are considering bankruptcy it is advisable to seek legal assistance from a knowledgeable Mooresville bankruptcy attorney.What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is a way to pay off and get rid of your past debt so you can move forward with a fresh start. The most common debts that contribute to financial problems are credit card debt, medical and vehicle debts. You will be able to liquidate some of your assets to repay debt but are also able to keep some possessions. When you are facing accelerated balances, a Chapter 7 bankruptcy might be exactly what you need to resolve your financial woes and move forward in life virtually debt-free.
Most people who file for Chapter 7 bankruptcy will have it resolved within six months, although some complicated cases could take a lot longer. Once old debt is discharged, you no longer owe it and can begin to build your credit again. It is important to note that any debt incurred after filing for bankruptcy will not be included in the resolution and will not be discharged.
When your credit card companies and creditors discharge debt, they often agree to resolve your debt for an amount that is less than the full amount you owe. They agree to do this so they are assured of getting paid at least some of the amount due. Once the debt is discharged, you no longer owe the money and it is considered settled. However, the blemish will remain on your credit history for a period of time. During that time you can start to rebuild your credit.What are Reaffirmation Agreements?
Some types of loans are not usually included in Chapter 7 discharges. This includes loans on items that you wish to keep. Most often, this includes your vehicle. If you have a loan on a vehicle and you want to keep it, you will need to reaffirm the debt with the loan company or bank. This means that you take new responsibility for loan repayment even though you filed for bankruptcy.
You will need to make payments and fulfill your obligation to repay the loan or the company is able to take steps against you that include repossessing the vehicle. Therefore, you need to make sure that you are aware of your financial obligations before you make a reaffirmation agreement. Your attorney will help you determine how to proceed with the many issues surrounding your bankruptcy.Understanding the Means Test
Not everyone who files for bankruptcy is allowed to file Chapter 7. In order to obtain a Chapter 7 bankruptcy you need to pass the means test. The means test is, simply put, a complex formula that determines whether you have the financial means to repay your debts. If you can repay, you will need to file for Chapter 13 bankruptcy rather than Chapter 7.
Chapter 7 bankruptcy is meant only for those who are financially unable to repay most of their debts. If you have the means to repay, you must do so under a Chapter 13 bankruptcy. In general, if your income is above a certain threshold, then it is assumed that you are able to repay or partially repay your debts and must then choose Chapter 13 bankruptcy.Get Help Before You File Bankruptcy
For many people, their financial situation is clear but for others, there are some questions. Bankruptcy can be rather complex, especially when determining which type of bankruptcy to file. You can get the guidance you need from a qualified Mooresville bankruptcy attorney. We will review your financial data and provide you with the options that are available in your particular case.
Filing for bankruptcy can bring an immediate end to the stress that your finances are causing in your life. When you file for bankruptcy, it stops creditors from harassing phone calls and letters and allows you to resolve your debt in a structured manner. Once your debts have been discharged you may find that you already start to have the ability to begin rebuilding your credit. This fresh start will help you get out from under excessive debt so you can begin anew. To learn more about your bankruptcy options and to get the help you need, contact our legal team at Arnold & Smith, PLLC today for a consultation.