The one downside to filing Chapter 7 bankruptcy is that you may lose assets to pay off your creditors.
Chapter 7 bankruptcy is a process of debt relief available in Arizona and throughout the United States. A bankruptcy is controlled by federal laws and rules. The process starts with document gathering, then the filing of a Petition. The Petition contains a summary of assets, incomes, creditors, and liabilities. Once filed the “automatic stay” is put in place to stop collection actions.
Often this can provide immediate relief. Shortly after filing, a 341 Meeting of the Creditors is set. During this brief hearing the filing party is sworn in, questions are asked, and additional information may be requested. Once the file is complete, the filing party will wait for their discharge.
Does a bankruptcy wipe out all my debts?
The Chapter 7 bankruptcy process allows you get a “fresh start,” to keep essential items, most likely a home and a vehicle, and liquidates the rest of your assets to satisfy creditors. The balance of your consumer debts, such as credit card debt, medical debt, and other personal loans is discharged. The discharge does “wipe out” your consumer debts, which makes it the most attractive form of bankruptcy for the average person.
But some debts are not usually dischargeable, like child support and student loans. Currently, student loans are only dischargeable in Chapter 7 in the case of “undue hardship,” which is very hard to prove.
Along with student loans, there are a number of pitfalls for Chapter 7. Some pitfalls include using old data and improperly measuring what expenses can allow you to “pass” the Means Test.
To measure your eligibility for Chapter 7, you must pass the “Means Test,” which essentially measures your ability to pay off your creditors. Or, you will need to have an exemption. Finally, you must not have completed a Chapter 7 bankruptcy in the previous eight years.
To get started, talk to a Lewis Labadie attorney to assist you in evaluating your eligibility for Chapter 7 bankruptcy.
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