Filing a Chapter 7 bankruptcy case is a big step in taking control of your financial problems. Chapter 7 is known as a “liquidation” or “straight bankruptcy” because the debtor is not reorganizing his or her debts through a bankruptcy plan, as in a Chapter 13 case. The debtor must meet the income requirements of the Means Test, meaning that he or she does not have any disposable income each month, after paying his or her living expenses, to pay toward debt. In many cases, the debtor’s net income after deducting all allowable living expenses is a negative number.
While there are many advantages of filing a Chapter 7 case, there are definite pros and cons of filing Chapter 7 that should be considered before making the decision to file a bankruptcy under this chapter of the Bankruptcy Code.
Examining the Pros and Cons of Filing Chapter 7 Bankruptcy
When you meet with me to discuss your options for resolving your debt problems, I will discuss your bankruptcy and non-bankruptcy options. This may or may not include filing a Chapter 7 case, based on your unique financial situation and circumstances. If it appears that filing a Chapter 7 case is in your best interest, I will discuss the pros and cons of filing Chapter 7 so that you can make an informed decision how to proceed.
Some of the pros of filing Chapter 7 include:
- It only takes between 4 and 6 months to file and complete a Chapter 7 case.
- Chapter 7 discharges most, if not all, of your unsecured debt.
- You may be able to void liens on household goods.
- It stops creditor harassment, wage garnishment, levies, seizures, repossessions, and foreclosure actions.
- Creditors are barred from ever attempting to collect a discharged debt.
Some cons of filing Chapter 7 include:
- Some of your property could be at risk; however, almost all Chapter 7 cases filed are no-asset cases, meaning the debtors retain all of their property.
- Chapter 7 will not eliminate the secured liens on collateral (e.g. mortgage loans, car loans, etc.). You can surrender the collateral and not be responsible for the debt; however, if you want to retain the collateral, you must continue paying the debt.
- Chapter 7 does not discharge most taxes, most student loans, alimony, child support, and court restitution (these debts are not dischargeable in a Chapter 13 case either).
- Chapter 7 will stop a foreclosure or repossession action; however, if you cannot catch up the payments, you will still lose the property, though you will not be responsible for the debt.
Because each bankruptcy case is different depending on the person’s financial situation, there could be pros and cons of filing Chapter 7 that are unique to your situation. To discuss the pros and cons of filing Chapter 7 in more detail, contact my office to schedule your free bankruptcy consultation.
Contact an Experienced Mount Holly Bankruptcy Attorney
Personal Approach, Professional Service, Affordable Payment Plans
The Law Office of Travis J. Richards, LLC is a full-service Mount Holly bankruptcy law firm focused on Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, debt consolidation, credit repair, tax liens, student loans and foreclosure. We represent clients in Burlington County and throughout South Jersey.
Contact our office at 609-267-5297 to schedule your free consultation to discuss bankruptcy and non-bankruptcy alternatives. You may also use our convenient online contact form and one of our friendly, professional staff members will contact you to answer your bankruptcy questions and/or schedule a free consultation with Travis J. Richards.
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