Among the numerous questions that people ask about Chapter 7 bankruptcy, one of the most common is whether a person is a good candidate for Chapter 7. The answer to this question depends on a number of complex factors, which we will review below.
Do You Own Property?
If you do not have a source of income or any assets, a creditor will often not be able to collect from you, which means that filing for bankruptcy may not be necessary. If you do have a source of income and valuable assets, however, it is likely that your creditors will take collection action against you. While payments for some types of debt can be automatically garnered from your wages or tax returns, such as child support, other types of debt require creditors to obtain court orders before they can initiate such collection efforts against you. By filing for bankruptcy before these orders are obtained, you can avoid liens being placed on your property.
How Much Debt do You Need Discharged?
Unfortunately, some types of debt are not capable of being discharged in Chapter 7 bankruptcy. As a result, if you do not have the right type of debt, Chapter 7 is not the best possible option for you. Some of the most common types of debt that are not capable of being discharged in Chapter 7 include alimony, child support, income taxes, and student loans. In other cases, creditors might object to debts being discharged in bankruptcy. If you have debts that do not qualify for Chapter 7 or a creditor is likely to object, you should not hesitate to speak with an experienced bankruptcy lawyer.
Do You Have Cosigners?
In situations in which someone else is also responsible for your debts, that cosigner will still be liable for your assets even if you file for Chapter 7 bankruptcy. Rather than erase the obligation of both individuals, Chapter 7 only forgives the debts of the person who files for bankruptcy.
Do You Own Property That You Will be Required to Give Up?
Whether Chapter 7 is a good fit for a debtor will be influenced by the amount of property that person owns that can be taken by creditors in lieu of repayment. Some kinds of property are exempt from being taken by creditors, such as motor vehicles within certain limits, reasonably necessary household items, reasonably necessary clothing, and life insurance within certain limits. Some of the items that people often must surrender include family heirlooms, financial accounts, second homes, and second vehicles. Fortunately, an experienced bankruptcy attorney can give you a better idea of what items you will likely be required to surrender and what you will likely be allowed to keep.
Speak with an Experienced Bankruptcy Lawyer Today
If you are not certain if Chapter 7 bankruptcy is a good option for you, an experienced bankruptcy attorney can help. Contact the Adam Law Group today to schedule a free initial consultation. We have helped numerous people successfully navigate the bankruptcy process and know what it takes to make sure that you obtain the results you deserve.