When people are struggling with too much debt, they may find themselves wondering how Chapter 7 bankruptcy works.
This type of bankruptcy is one of the most common. It allows individuals to liquidate their assets in order to pay off their debts.
After all of their debts are paid off, the individual does not owe any remaining liabilities.
Before filing for bankruptcy, an individual must consider whether or not a Chapter 7 bankruptcy is the best choice.
While it can be beneficial to use this type of bankruptcy as opposed to other options such as Chapter 13, there are some consequences associated with choosing to file.
For example, individuals may be ineligible for certain types of loans and lines of credit for a period of time following their bankruptcy. They may also be ineligible to run for political office after filing for Chapter 7.
Once the individual has considered all of these things, they can then begin looking into how Chapter 7 bankruptcy works.
As previously stated, this type of bankruptcy allows individuals to liquidate some of their assets in order to pay off their debts. After all of the debt has been paid, the individual is discharged from any remaining debt liability.
If an individual is struggling with credit card debt, they can use Chapter 7 bankruptcy to get rid of those liabilities.
However, there are some types of credit card debt that don’t fall under this category. For example, if the credit card holder has used a card for necessities or to invest in their business. They cannot get rid of that debt through bankruptcy.
One of the most common questions around Chapter 7 bankruptcy is how it affects an individual’s 401k.
If an individual is filing Chapter 7 bankruptcy on their own, then they are allowed to keep any assets they have in their 401k.
However, if an individual is filing Chapter 7 bankruptcy on behalf of a company, they are not able to keep any of the assets in that company’s 401k.
If an individual is considering filing Chapter 7 bankruptcy, they should be aware that there are some assets that cannot be liquidated.
For example, an individual may not choose to liquidate their home or vehicle if they expect it will decrease in value and/or sell for less than the amount owed on the loan.
In a Chapter 7 bankruptcy, the individual will typically experience a decrease in his or her personal credit score. However, there are some other factors that determine an individual’s credit score after filing for Chapter 7 bankruptcy, including whether or not they made all of their payments on time and how long ago the bankruptcy was filed.
After an individual has filed Chapter 7 bankruptcy, there are some steps that they need to follow in order to receive their discharge.
A creditor may object if an individual doesn’t provide the necessary paperwork related to their case. However, most creditors won’t do this since they stand very little chance of winning the objection.
Once the individual is no longer required to make any payments on their debts, the court will send a discharge notice.
It can be a helpful option for individuals who are struggling with debt. But it’s important to remember that there are some consequences associated with this type of bankruptcy.
For example, an individual may not qualify for certain financial opportunities after filing Chapter 7 bankruptcy. If an individual needs financial assistance, they may be better served by filing for Chapter 13 bankruptcy.
To discuss with an experienced attorney, call us today!
At Blue Bee Bankruptcy, our lawyers are highly experienced in the various filing options.
More importantly, we understand that each case we receive is unique and each client has different needs and goals. We will discuss these signs with you and decide the best route to take.
We strive to help our clients rebuild their lives and take steps toward a better financial future through filing.
If you’re dealing with the potential of bankruptcy, give us a call. Our team will work to help you by reviewing all of the options our firm has available. We will ensure you’ll get the best possible outcome for your situation.
Get in touch today so we can start working on either halting bankruptcies or preventing them from taking place altogether!
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