What Can Chapter 7 Bankruptcy Do For You?

How Can Chpater 7 Bankruptcy Help You Eliminate Debts?

There are many advantages to Chapter 7 as discussed below. Whether Chapter 7 is right for you depends on a complete analysis of your financial situation. However, most people that complete a Chapter 7 bankruptcy have most of their debts wiped out and get to keep most of their personal belongings. If you want to learn about the Chapter 7 process, click here. If you want to learn about qualifying for Chapter 7, click here.

What Does Chapter 7 Do?

Chapter 7 eliminates all dischargeable debts that the debtor wishes to eliminate without the debtor paying anything more on those debts. Some debts which are dischargeable, such as a car loan, a debtor may not wish to have discharged so that the car can be kept.

Chapter 7 stops wage garnishments, lawsuits, telephone calls from creditors and collection agencies. It also stops foreclosures, but generally only for a short time. However, this can be enough time for the debtor to make other living arrangements

What Does Chapter 7 Not Do?

Chapter 7 will not give a debtor time to make up past-due payments. Chapter 7 will not save a home from foreclosure. Foreclosure can be stopped, but because Chapter 7 does not give the debtor time to make up past-due mortgage payments, the foreclosure will generally be allowed to continue after the lender goes to the bankruptcy judge and asks for permission to continue.

Debts will not become current upon filing bankruptcy. If a debt is past-due, it will remain past-due. If it is current, then it will remain current.

There are some debts that Chapter 7 cannot discharge such as a court-ordered child or spousal support. Student loans are also generally not dischargeable. "Trust Fund Taxes" will not be discharged nor will some taxes.

Advantages of Chapter 7 Over Chapter 13

Chapter 7 has a number of advantages over Chapter 13. First off, Chapter 7 is reasonably quick as it normally takes about 4 months from beginning to end, unlike Chapter 13 which takes from 3-5 years to complete.

Another advantage to Chapter 7 is that the debtor stops making payments on most debts. Most debts are wiped out without the debtor paying another cent on them after filing bankruptcy. The only debts the debtor would usually keep paying are debts tied to property the debtor wishes to keep such as car loans and mortgages. Unlike Chapter 7, Chapter 13 requires the debtor to make some payment on debts for 3-5 years. To learn more about the differences between Chapter 7 and Chapter 13, click here.

At the end of the Chapter 7 process, the debtor has only those debts that the debtor wants, or can't eliminate through bankruptcy. For an overview of the process of Chapter 7, click here.

If You Have More Questions

Please contact us if you have more questions or are ready to move forward and start the process of becoming debt-free. Remember, we are here to help you resolve your debt problems, so call us now!

(949) 954-7568