Advantages of Filing Chapter 7 Bankruptcy
Filing a Chapter 7 bankruptcy has many advantages. Drowning in debt may be extremely stressful. Continuously receiving telephone calls from creditors may become unbearable. However, when you file for bankruptcy, the automatic stay feature in bankruptcy law makes it illegal for creditors to call you or any other form of harassment. In addition, there are several other advantages of filing a Chapter 7 bankruptcy.
Keep your home and vehicle
A common misconception of a Chapter 7 bankruptcy is that you will lose valuable possessions. Provided you do not have much equity in your home, and foreclosure proceedings have no commenced, then you may keep your home. With respect to your car, there are exemptions that provide protection, however this depends on the value of your car.
Protect most of your household possessions
Advantages of filing a Chapter 7 bankruptcy is that not all of your possessions will be ceased by the Trustee. All your household goods and tools of trade are exempted from being seized by the trustee in a bankruptcy. Valuable jewelry and electronics are often not seized because of their age and condition. In the majority of Chapter 7 cases, no property is seized at all.
Unsecured debt is eliminated
Any debt that has no collateral for the payment thereof may be completely eliminated if you qualify for a chapter 7 bankruptcy. An unsecured creditor, may however receive a portion of the value of any seized property, but in most cases there is no seized property.
Assistance with secured debt
The elimination of your unsecured debt, makes payments towards secured debt such as your mortgage and car note much easier.
There are two ways to qualify for a Chapter 7 bankruptcy
The income limit in a Chapter 7 bankruptcy makes it difficult for people to qualify. However, if you earn more than the median salary in your state, then you may still qualify for a Chapter 7 bankruptcy through the Means Test. The Means Test involves a process to determine whether you will have any leftover income at the end of the month to pay unsecured creditors. Irrespective of your salary, if there is little or no money at the end of the month, you will qualify for a Chapter 7 bankruptcy.
You may never have to appear before a bankruptcy judge
There is only one mandatory appearance before the bankruptcy trustee during the creditors meeting. Although, there is a possibility that a court hearing may stem from the questions posed by the trustee or creditors, the majority of chapter 7 cases do not involve court appearances.
Some of your stress is lifted from your shoulders
The automatic stay feature of a Chapter 7 bankruptcy stops any harassing calls and you do not have to pay your unsecured creditors whilst in bankruptcy.
Quick and effortless
If your case is fairly simple with no complications, a Chapter 7 bankruptcy may be finalized in approximately 4 to 6 months. Whereas with a Chapter 13 bankruptcy, most debtors are under bankruptcy court supervision for 5 years.
A fresh start as soon as possible
Perhaps one of the greatest advantages of filing a Chapter 7 bankruptcy is that the process is fairly quick. A Chapter 7 bankruptcy does not require a repayment plan spanning over 3-5 years as is the case with a chapter 13 bankruptcy. Thus, you will experience financial freedom much sooner with a Chapter 7 as opposed to a Chapter 13.