In today’s economy, many people are struggling to make ends meet and the financial consequences will have long-lasting effects. This is especially true for those who have lost their jobs. Luckily, U.S. law gives those most affected a financial lifeline, Chapter 7 bankruptcy.
Chapter 7 bankruptcy helps those facing mounting debt and bills restart their life. While not a perfect option, it can give those facing job losses and financial distress a clean financial slate.
Chapter 7 bankruptcy is often referred to as “liquidation bankruptcy” or “straight bankruptcy.” Essentially, in this process, one’s assets are sold off to pay creditors, but at the end of the process, debts are discharged and debtors are relieved of any further obligation to pay.
Before going down the Chapter 7 road though, it is important to understand some of the drawbacks. Those who choose this path will lose some of their property and see their consumer credit score lowered. But, it does immediately stop credit phone calls and stop court proceedings, like foreclosures.
Not everyone will qualify to file a Chapter 7 bankruptcy, though. To qualify, one must pass a “means test,” and not all debt types qualify for discharge. In addition, bankruptcy courts charge a filing fee, administrative fee, and a trustee surcharge. Nonetheless, if the filer cannot pay these fees, even if installments are offered, bankruptcy courts have the ability to waive these fees for those with incomes less than 150% of the poverty level.
For those financially struggling during these incredibly trying times, it can be hard to see a light at the end of the tunnel. There is hope. Chapter 7 bankruptcy can be a much needed financial lifeline. Fortunately, there are experts in this process, and getting their help can help filers navigate this complicated process.