If you are unable to pay the monthly minimum on your credit cards and are constantly harassed by debt collectors, filing for bankruptcy is an effective way to regain your financial footing. If you meet certain income requirements, you can file for Chapter 7 bankruptcy. Under the terms of Chapter 7 bankruptcy, your credit card debt, unpaid medical bills, balance on certain kinds of loans, and other forms of unsecured debt will be wiped clean.
Even if you don’t initially pass the means test for filing for Chapter 7, you can claim certain kinds of exemptions that may qualify you for Chapter 7. At the law office of Cravens & Noll, we prepare and file Chapter 7 bankruptcy petitions for debt and income-eligible clients. We review your financial situation and determine if you qualify and whether or not you can claim certain exemptions.
If you’re facing mounting debt that is preventing you from staying current on your home mortgage or other bills, contact our bankruptcy lawyers at Cravens & Noll today to schedule an initial consultation to discuss your case.
Can I Keep My Home if I File for Chapter 7?
Once you file for bankruptcy, an automatic stay is placed on your property that requires debt collectors and banks to halt all collection or foreclosure actions against you. However, this stay is temporary. If, after filing for bankruptcy, you are unable to pay your mortgage, your bank can foreclose on your home. However, since Chapter 7 discharges your unsecured debt, you may have enough disposal monthly income available to pay your mortgage. If you have fallen behind on your mortgage, you may be able to convince your bank to provide a plan that allows you to pay a little extra every month until your past due mortgage is brought current.
Will I lose My Car, Furniture, or other Possessions?
Under the terms of Chapter 7 bankruptcy, the court can liquidate some of your property in order to pay creditors all or a portion of what you owe them. Typically, luxury items like high-end electronics, expensive cars, unnecessary appliances like costly cappuccino machines, or luxurious clothing can be liquidated. However, there are exemptions for different kinds of property that may allow you to keep most, if not all, of your possessions. Our attorneys can review your situation and determine if any of your property will likely be liquidated.
People who file for Chapter 7 bankruptcy are usually able to keep their cars if they are able to maintain payments on them. In some situations, however, a bank or car dealership may ask you to sign a debt reaffirmation agreement. Reaffirmation agreements are not always in your best interest, however, especially if the debt on a car is more than the car is worth. Our lawyers can review the specifics of your situation and advise you as to whether or not you should sign a reaffirmation agreement.
Credit After Bankruptcy: Bankruptcy Is Not the End of the World
If you are in serious financial debt, considering bankruptcy, and you have not yet talked to an attorney about your debt-relief options, you probably assume your life is going to be worse after filing for bankruptcy. You probably envision some kind of scarlet letter on your chest, unable to get any kind of credit for the rest of your life.
Rebuilding Your Credit After Bankruptcy:
Although filing for bankruptcy will stay on your credit report for 10 years, and it will do some initial damage to your credit score, it will probably benefit you in the long run:
- Stop default: When your debts are discharged, they are no longer reported as delinquent or in default.
- Appear to be a better risk for creditors: Since you cannot file for a Chapter 7 bankruptcy again for eight years, many creditors will see you as a good risk.
- Start building small: Because they see you as a good risk, many creditors will be willing to offer you credit cards and other lines of credit with modest limits. If you accept a small number of these credit lines and keep up with your payment, you can begin small with rebuilding your credit, growing your limits higher and getting better rates over time.