A person files for bankruptcy when their debt becomes unmanageable. When your scheduled debt payment becomes more than your monthly income, you can file for bankruptcy. In 2021, 399,269 cases of personal bankruptcy surfaced in the USA.
With today’s expenditures and interest rates, your debts may be out of your hands. If you cannot manage your debts, you can file for chapter 7 bankruptcy. It is necessary to let professional bankruptcy lawyers handle your case. Asset management can be a complicated process. If you fail at managing, you will be troubled by all the accumulated debt. Here are a few pros and cons of chapter 7 bankruptcy.
Keep A Specific Amount Of Money
Many people fear filing for bankruptcy because they fear losing their possessions and savings. It is a rational fear of losing all financial control over your assets. When the bank appoints an impartial case trustee, it gives them the power to sell your assets.
Indebted people often mistake this for a complete loss of assets and money. Filing for bankruptcy does not mean that you won’t be able to keep a portion of your savings. In most states, an indebted person can keep 20,000 dollars in their bank.
After you file for bankruptcy, your bank credit will go a hundred points down. You may keep a credit score of 500 or 550 points after filing for bankruptcy. You can face a lower credit score if you have a low score before bankruptcy.
Liquidate Assets to Forgive Debt
Your case trustee will liquidate all your assets and ensure a fair market value of the assets. The liquidated assets will go to all your creditors to satisfy your debts. If you have taken debt from multiple sources, the bank will hold them for you.
To file for bankruptcy chapter 7, you need to make an appearance in court to elaborate and provide the record of your assets. You have to answer questions regarding the sale of your assets and how you acquired them. These questions are essential, according to the law, for you to get a chance to file for bankruptcy. You must comply with all the demands and jurisdictions that the courts request. Ultimately, the creditors will forgive your debt. You may lose substantial assets in court to the bank, and the creditors will forgive your debt.
Personal Property Exemptions
When the bank asks for the liquidation of your assets, it does not include your home. You do not have to worry about your personal property that sustains your life. If you have other property, you can liquidate or file bankruptcy, chapter 7. Take the help of a bankruptcy attorney to guide you through the burdensome financial crisis. Do not punish yourself by going through the system alone without any help. Make sure you hire a professional to deal with all the upcoming problems. A practiced lawyer who knows their way around the crises will help you navigate a safer and more suitable path to bankruptcy.
Buy Time for Mortgage
Many people buy their homes with mortgages. In the recent age of added and lifestyle expenses, it is almost impossible for people to build a house of their own. It is everyone’s dream to build a house for their children and with their partners. Most people take out a mortgage to get home. People think they can afford a large home because of low installments. But in reality, the maintenance of a house also takes up a lot of money. You should buy a home that you can keep and maintain.
If you are stuck on your home mortgage, you can file for bankruptcy. Filing for bankruptcy may not remove the mortgage on your home, but it will buy you some time. You can use that time to resolve your financial issues and get back on your feet.
The bank will let you take more time from your creditors if you file for bankruptcy chapter 7. You can file for chapter 7 bankruptcy online or offline, as you see fit.
Chapter 7 Bankruptcy VS 13
Chapter 13 bankruptcy makes the indebted person pay their loan according to a plan. The lawyer or financial advisor makes a plan for the bankrupt person to help them get out of debt by paying it in installments. For chapter 7 bankruptcy, the bank liquidates your assets to compensate for your debt, and the creditor may forgive the rest of the debt.
Both bankruptcies have different criteria for qualification, and all people have an equal chance of filing one. You must acquire the help of an attorney to get an explicatory idea of these filings and if you qualify for them.
Discharge From Personal Liability
After a person files for bankruptcy, the court discharges the person from all personal liability. The court issues a discharge order before the end of the trial for people to help manage their resources. Your creditors will not come from you after the court orders to discharge you from all the creditor’s debt.
It helps keep the pressure down in an unmanageable situation for many people. The court orders provide you with more time and the help of an impartial case trustee. You can let the bank and the court take care of your assets. Going bankrupt is not a pleasant experience, but it makes your life bearable after the immense burden of debt.
Rejection of Bankruptcy
If you fail to comply with the court dates and requirements, your application will be rejected. You have to make sure you reach court on time and provide all the relevant records. If you have filed for bankruptcy before and the court denies it for a reason, or you hold your lieu, you will not be eligible to file for bankruptcy again. If you file for bankruptcy once, you are not eligible for it for the next eight years.
Therefore, you must keep your financial affairs in order and hire a lawyer for legal representation and guidance in the event of bankruptcy. Apply for chapter 7 or chapter 13 bankruptcy, whichever suits your situation.