Chapter 7 Bankruptcy
Chapter 7 bankruptcy was designed to help people escape insurmountable debt. Whether you have lost your job or another source of income, are going through a tough divorce, or have undergone a tough medical emergency, your finances may no longer be in the healthy state they were before. Here’s how Chapter 7 bankruptcy can help:
- Putting a stop to creditor harassment — Creditors can contact you, your friends, and your family searching for unpaid debts. Working with a bankruptcy attorney on our team allows us to put a stop to these harassing calls.
- Stopping repossession — After a vehicle has been repossessed and actioned, we can eliminate any balance due thereafter. This eliminates your risk of a lawsuit or garnishments against you from the finance company.
- Slowing foreclosure — Some foreclosure situations can be halted by filing for bankruptcy. Talk to a bankruptcy lawyer on our team to learn if this applies to you.
- Protecting assets — The state of Maryland allows you to keep certain assets, as they are exempt from liquidation.
Start rebuilding your credit score and cut back your debt by considering Chapter 7 bankruptcy. At Sanchez Garrison & Associates, LLP, we would be happy to discuss your options and any potential benefits. Get in touch with us today for a free case consultation.
How Can Chapter 7 Bankruptcy Help?
Filing for bankruptcy sounds scary and worrisome, but it can be extremely beneficial to those with significant amounts of debt. From protecting you from harassing collector’s phone calls to allowing you to keep many of your possessions, many people find that filing for Chapter 7 bankruptcy can help them become financially stronger in the future.
Who qualifies for Chapter 7 bankruptcy?
Not everyone meets the qualifications for Chapter 7 bankruptcy. If the following statements apply to your situation, please reach out to our team.
- Your debts are more than half your annual income.
- It would take a minimum of five years to pay off your debt, even if you took extreme steps to do so.
- Your debt has become a source of stress and has interfered with your personal life, including relationships or your ability to sleep.
- You have little to no disposable income.
- Your monthly income is below the average income in your state.
What Does The Chapter 7 Bankruptcy Process Look Like?
Once you have decided that filing bankruptcy is the proper option for you and you have successfully filed, knowing what steps to take next can sometimes be challenging. If you are in the Baltimore area, we recommend consulting a bankruptcy attorney like Sanchez Garrison & Associates, LLP for help through your chapter 7 bankruptcy process. Once you have successfully filed, all of your unsecured or non-exempt debts are essentially gone. This means that you avoid foreclosing on your properties, avoid your car being repossessed, and are left with no more debt.
After filing bankruptcy of this type, you are required to sell all of your possessions/properties that aren’t exempt in order to pay back your credit card debt, student loan debt, or whatever other types of debt you have acquired the best you can. You are allowed to keep things that are necessary for day-to-day life. Even though you have to sell most of your possessions, you are often left with little to no remaining debt. This is why chapter 7 bankruptcy is known as liquidation bankruptcy. You are required to liquidate all of your assets, but you are left unburdened. Types of debt that can be eliminated under chapter 7 bankruptcy are:
- Medical bills
- Credit card debt
- Student loan debt
- Major tax debt
- Alimony and child support debts
There may be other debts that are covered under chapter 7 bankruptcy. Consult your bankruptcy attorney with any questions on what debts are covered, what debts are secured or unsecured, and more.
What Are The Consequences Of Filing Chapter 7 Bankruptcy?
After you and your bankruptcy lawyer file for chapter 7 bankruptcy, you will have to sell all of your assets that are not necessary for daily life. You will have to sell things like:
- Valuable collections of cards, stamps, coins, etc.
- Family heirlooms
- A secondary vehicle
- A secondary home
- Recreational vehicles like RVs, ATVs, dirtbikes, etc.
Anything that you don’t need and any money that you may have in the bank, stocks, bonds, or other investments must be used to pay creditors and lenders.
Even after successfully filing bankruptcy, there are a few debts that may still remain depending on the situation. Chapter 7 bankruptcy can be a fresh start for some people, but is not a get-out-of-jail-free card. There are very real consequences to filing chapter 7 bankruptcy and the debts that you are still responsible for differ on a case to case basis. In addition to potentially having some debts remain, your credit score will take a substantial hit. Depending on the situation, after filing chapter 7 bankruptcy, your credit score can drop anywhere between 100–200 points. The bankruptcy will also show on your credit report for the next 10 years. With a bankruptcy on your credit report, it is difficult to get a loan, to say the least — and if you do manage to get a loan the interest rate is often very high.
You also need to consider other people when filing chapter 7 bankruptcy. With chapter 7 bankruptcy, your co-signers are completely unprotected. This means that even if you are no longer responsible for your debts, your co-signer still will be. Your co-signer will need to pay off any remaining debts of yours, even when you are no longer legally required to — unless they too are filing for bankruptcy. Take the time to make sure that you are not doing any financial harm to any co-signers by filing chapter 7 bankruptcy, as they will be responsible for the debt you have accrued on the item they co-signed for — even when you no longer are.
Chapter 7 bankruptcy can offer a new beginning to those who need it most. However, it may not be the best fit for your situation. To learn more about the benefits of declaring bankruptcy and see what solution makes the most sense for you, reach out to the experienced bankruptcy attorneys at Sanchez Garrison & Associates, LLP. We look forward to working with you.