Chapter 7 bankruptcy is one of several branches of bankruptcy people use to find financial relief. This branch of bankruptcy offers a lot of rewards for those who qualify and file, but there are some tradeoffs, or risks, too. Before you file, make sure you know exactly how this works so you are not surprised during the process. Here are the two main things you should know about Chapter 7 before filing.
The main reward, or benefit, you can receive through Chapter 7 is the discharging of your debt. Discharging of debt means forgiveness of debt. When debts are discharged, they are wiped out, meaning that you no longer owe them. In fact, if your debts qualify for discharge, you will never be responsible to repay them.
The question you will need to ask your lawyer is which debts will be discharged. You may have debts that qualify for this, but you may also have debts that do not. If you owe money on credit cards, these debts will most likely be discharged. If you owe money on your home, and if you want to keep your house, this debt will not be discharged.
Meeting with a bankruptcy lawyer is a great way to find out how your debts will be handled in bankruptcy. If you find that most debts qualify for a discharge, Chapter 7 might be a good option to use for debt relief.
The one risk you should realize before you file is that you could lose things you own. When the court discharges your debts, they will look for ways to pay your creditors. They probably will not be able to repay them in full, but they would rather give them something rather than nothing.
To find ways to pay off your creditors, they will look closely at the things you own. If you own things that are worth money, the court has the right to make you surrender the items. When they view your assets, they will always look at any loans attached to them. They will only seize items that have equity in them, because equity is needed to make money from selling the items.
Talking to a bankruptcy lawyer, such as Thomas K Mast, about your unique situation is the only way to find out how your debts and assets will be handled during bankruptcy. If you would like to talk to an attorney, call one today to schedule an appointment.