Should I File a Chapter 7?

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Should I File a Chapter 7?
A Guide to Choosing the Right Chapter of
Bankruptcy
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Should You File a Chapter 7?
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Deciding whether to file Chapter 7 bankruptcy
requires
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Deciding whether to file Chapter 7 bankruptcy
requires
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Have You Explored Alternatives to Bankruptcy?
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Before filing for any chapter of bankruptcy, you
should make sure you have explored other options
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Alternatives to bankruptcy can include debt
consolidation or debt settlement negotiation
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Bankruptcy is a better alternative to other
measures such as
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Bankruptcy is a better alternative to other
measures such as
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Your Options for Bankruptcy
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Chapter 7 bankruptcy is one of several options
businesses and individuals have when considering
filing for bankruptcy
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• Individuals usually choose between Chapter 7 and
  Chapter 13

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Businesses can opt for Chapter 7 if they no
longer want to remain operational after going
through bankruptcy
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• Otherwise, business bankruptcies are usually
  filed under Chapter 11 or 13 depending upon the
  size of the business and how it is structured

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How Chapter 7 Is Different
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Chapter 7 differs from Chapter 13 bankruptcy for
individuals because
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Chapter 7 differs from Chapter 13 bankruptcy for
individuals because
Chapter 7 allows you to discharge debts without
having to pay back a portion as part of a three
to five year repayment plan (Chapter 13 requires
a repayment plan)
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Chapter 7 differs from Chapter 13 bankruptcy for
individuals because
Chapter 7 allows you to discharge debts without
having to pay back a portion as part of a three
to five year repayment plan (Chapter 13 requires
a repayment plan)
Chapter 7 requires liquidation of certain assets
so money can be generated to pay creditors
(theres no such requirement in chapter 13)
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Are You Eligible To File Chapter 7 Bankruptcy?
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When deciding whether to file Chapter 7, YOU
NEED TO ENSURE YOU ARE ELIGIBLE
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Changes to the bankruptcy law in 2005 imposed
strict restrictions on who can file under this
chapter of the bankruptcy code
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To file chapter 7 you must either have an income
below the poverty level in your state OR pass a
means test
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The means test judges the amount of disposable
income you have available to you to pay back
debts after covering your required monthly
expenses
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If you have no money to pay debts, then you can
pass a means test
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Will Chapter 7 Take Care of Your Debts?
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You also need to ensure Chapter 7 will actually
eliminate your debts before filing
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In a chapter 7 filing, you can have credit card
debt, medical debt and personal loan debt
discharged
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You cannot get rid of car loan debt or mortgage
debt unless you give up the car or house
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You cannot generally eliminate student loan
debt, unpaid child support, or certain types of
tax debts or debts from certain kinds of lawsuits
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A bankruptcy lawyer should be consulted to help
you assess whether your specific debts can be
discharged
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Do You Have Assets to Protect?
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If you have significant assets, you may not want
to file chapter 7 as the money or possessions
you have can be taken and/or sold to generate
funds to repay creditors
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This does not occur with a Chapter 13 filing, so
if you are concerned about keeping all that
youve earned or acquired, a Chapter 7 may not
be the best choice
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Are the Assets Covered by Exemptions?
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Many types of assets in a chapter 7, however, are
considered exempt under state and/or federal
rules
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(No Transcript)
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If your assets that you are concerned about
protecting fall within exemptions, then you can
file Chapter 7 without worrying about protecting
them
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A bankruptcy lawyer can help you to determine if
your assets are at risk in a bankruptcy filing
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Chapter 7 and Your Credit
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You should also consider the impact that a
chapter 7 filing can have on your credit
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The bankruptcy CAN lower your credit score but
this is not always the case
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If you are deeply in debt and making late
payments, bankruptcy can be the first step
towards starting to fix your credit score
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Chapter 7 does generally do more damage to your
credit than a chapter 13 filing, so keep this in
mind when considering whether you should file
Chapter 7
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Get rid of the troublesome debts that you have
and start to move forward towards a better
financial future
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Bankruptcy Lawyer in Washington, DC, Maryland and
Virginia
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