Lifestyle Tips

Bankruptcy 101: A quick review of Chapter 7 

Just because you are grappling with financial distress doesn’t mean you have to file for bankruptcy. However, bankruptcy could be the ultimate option for some people who do not have other viable means of debt management. Bankruptcy can be classified into two segments – Chapter 7 and Chapter 13. More than 60% of all bankruptcy filings are Chapter 7. If you believe that this could be your option, it is important to find a reliable bankruptcy attorney Hagerstown, MD, for a consultation. Lawyers can help you understand if you would qualify for Chapter 7. For your help, here are some key aspects worth knowing about Chapter 7. 

The basics

Not everyone qualifies for Chapter 7 bankruptcy filing. There is a means test that will consider your disposable income compared to the state median income. The median income varies between states. If you file for Chapter 7, you should be able to discharge most of your unsecured debts, but there are exceptions. For example, if you were paying for child support and alimony, you still need to do that. The debts that you can discharge through Chapter 7 bankruptcy include medical bills, unsecured personal loans, credit card bills, income tax, and if you decide to surrender your home, you can get rid of unpaid HOA fees too. 

When is Chapter 7 a viable option?

A skilled attorney can advise you on the pros and cons of Chapter 7 for your circumstances. Bankruptcy can have different outcomes for different people, and this is the precise reason why you need to consult an attorney. Chapter 7 could be an option for you if your debts are more than your annual income. If you have debts that cannot be repaid in many years to come despite taking drastic measures, you may benefit from the decision. Chapter 7 is also an option for people with very little or no disposable income. 

Other things to know

What happens to your house? If you have a mortgage and have been current with your payments, you can keep the house as long as you can pay for the upcoming payments. You should be able to retain your car too. Filing for bankruptcy involves a considerable amount of paperwork, and you have to get it right. Make sure that you do your homework and hire an experienced and known lawyer. Your attorney can take care of the bankruptcy process, which can minimize your stress.