Learning About Chapter 7 Law

When debt and bills just become too much, people begin to ponder their options. They can't borrow money and robbing a bank is certainly out of the question. Filing for bankruptcy eventually seems like the only viable option. There are many alternatives to Chapter 7 Law, but it is the most beneficial -especially for individuals. It is a way for people to start fresh and eliminate your unsecured debt without having to worry about paying off creditors. In most cases, you can qualify for new credit cards within six months of your Chapter 7 discharge.

The main point to understanding Chapter 7 is that it mostly deals with your unsecured debt. This means any debt not secured by collateral, such as your home or car. In most cases, you can keep your home and car as long as you continue to make your monthly payments. In addition, in most cases, your home furnishings, jewelry, and bank accounts will not be seized. But not just anyone can file for Chapter 7, especially since Congress decided to crack down on the abuse of filing for bankruptcy. In 2005 they passed the Bankruptcy Abuse Prevention and Consumer Protection Act. While filing for bankruptcy may be scary to some, it can be a relatively painless process if you have excellent attorney representation.

With this new law came a "means test" which debtors must complete in order to be eligible. If your gross income exceeds the median income established for your state, you must complete a form which is similar to a tax form. With the assistance of an experienced attorney, most people will find that, despite the new guidelines, they are still able to get Chapter 7 relief. Besides filling out the means test, you must also complete an approved Credit Counseling Course and a Financial Management Course. Speaking to a bankruptcy lawyer is a very smart decision because they can determine if you can file and they will help you through every step of the process.

Unlike a Chapter 13, there is no repayment plan. The bankruptcy trustees will gather and sell the debtor's nonexempt assets (of which there are usually none) and give the money to creditors. Your home may be subject to liens, but you can speak with a bankruptcy lawyer to make sure you can pay your mortgage.

Filing for Chapter 7 can be a new start, free of tremendous debt. But before you take the plunge and get ready to start over, speak with an experienced bankruptcy lawyer to learn if this is the right option for you.