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Bankruptcy Baltimore: What’s Chapter 7 Bankruptcy? - Sanchez and Garrison


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Chapter 7 bankruptcy is something that many people may have heard of, but few fully understand until they have to deal with it. Chapter 7 bankruptcy can benefit a wide range of people facing many different situations. In today’s blog from our team here at Sanchez Garrison & Associates, LLP in Baltimore, we take a closer look at chapter 7 bankruptcy and what information surrounding it you might need to know.

If you live in Baltimore or it’s surrounding areas in Maryland and need help with chapter 7 bankruptcy, then contact us at Sanchez Garrison & Associates, LLP today. We are experienced, bankruptcy attorneys with a passion for helping people.

What is it?

The main purpose of chapter 7 bankruptcy is to help people escape insurmountable debt. Sometimes things don’t go your way in life and you end up in a situation that feels nearly impossible to get out of. That’s why for some people, chapter 7 bankruptcy can help change their life.

In more specific and technical terms, chapter 7 bankruptcy allows you to eliminate all of your unsecured debt. Unsecured debt is debt that is not attached to a specified asset. Typically, those who file bankruptcy of this type are trying to eliminate credit card debt, overdue bills, personal loans, and medical dues.

How can it help?

Chapter 7 bankruptcy can help people in a few different ways. First and foremost, once you file for bankruptcy, the overwhelming and harassing calls from debt collectors will stop. This gives you the time and space you need to figure out your next steps and how you are going to handle your situation. For many people, chapter 7 provides a fresh start and a chance to start a more financially secure future. There are a few drawbacks that we will discuss in detail later in this blog, but chapter 7 bankruptcy can be a good option for those who feel like they are running out of options.

Who is it for?

Contrary to popular belief, filing bankruptcy can actually be a viable option for people from all walks of life — not just for those who have spent beyond their means. Some people lose their job and struggle to find another source of income, some people incur large and unavoidable medical expenses, or something else out of their control created a difficult situation. Whatever led you to the situation you are in, filing chapter 7 bankruptcy is sometimes the best option moving forward.

There are some requirements for filing bankruptcy chapter 7 can vary, but some of the requirements are often:

  • Your debt has to be more than half of your annual income
  • It would take you more than five years to pay off your debts, even while using extreme measures like selling your most valuable assets (home, cars, etc.)
  • Your debt is to the point to where it is having a significant negative impact on your life, relationships, or health
  • You have no disposable income or hardly any disposable income
  • Your monthly income is below the median (not the average) income in your state

If you or a loved one has questions about or needs help with filing bankruptcy, you can trust our team at Sanchez Garrison & Associates, LLP in Baltimore. We can help guide you through the entire process and help you achieve a more desirable outcome. Reach out to us at Sanchez Garrison & Associates, LLP today.

What does it look like?

Filing bankruptcy can sometimes be a confusing and overwhelming endeavor when you try to tackle it alone. That’s why we recommend working with a professional bankruptcy attorney like us here at Sanchez Garrison & Associates, LLP in Baltimore. Once you recruit your bankruptcy attorney and successfully file for chapter 7 bankruptcy, you typically need to liquidate all of your assets that aren’t exempt. This means that you are required to sell all of your non-exempt items and use the proceeds to pay off your debtors as much as you can. This is why chapter 7 bankruptcy is known as the liquidation bankruptcy — because you sell (liquidate) absolutely everything that is not crucial to your everyday life to repay your debtors and the score is considered settled.

After that, all of your unsecured or non-exempt debts will be eliminated. This helps you avoid foreclosure, repossession, and helps you keep things that you need for day-to-day life. Then, you’ll have a fresh financial start to build a secure future for you and your family.

Are there consequences?

Yes. There are most certainly consequences to filing chapter 7 bankruptcy. As stated earlier, you must sell all of your possessions that are not crucial to your daily life to help repay your debtors. Additionally, chapter 7 does not always get rid of all of your debt — there are some types of debts that will still exist even after you’ve filed bankruptcy. These are things like taxes, alimony, child support, and more.

Filing bankruptcy of this type will also make your credit score drop by quite a bit. Each situation is different, so the number it will drop by varies as well. Typically, people report their credit score dropping between 100 and 200 points. This makes it nearly impossible to get a loan and sets you up for very high-interest rates down the line.

Perhaps the biggest consequence is that your co-signers are not protected. This means that even if all of your debt is eliminated, your co-signers from the past will still be on the hook for all of your debts. We recommend always checking that your chapter 7 bankruptcy case will not have any negative impact with previous co-signers.

Who should you call?

Here at Sanchez Garrison & Associates, LLP, in Baltimore, we have years of experience when it comes to bankruptcy law. We know the ins and outs and can help guide you through any intricacies that may arise when filing bankruptcy. Call us today to schedule your free consultation today.

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