If you file Chapter 7 bankruptcy, you are essentially liquidating all of your assets. It may take six months until the procedure is finalized. There are good things and bad things about this legal maneuver. Here are some to consider.

The good

The Federal bankruptcy Court will issue an order of relief. Creditors or bill collectors cannot bother you. They cannot call you or attach your paycheck. You might have seen people selling books about little known laws. This is one of those laws. This can be a big help to some people.

You will not have to sell everything. Usually you can keep your vehicle and your home. However, you must be current on payments. You might have a lot of equity in them, the equity may be subject to surrender. In most cases, people can keep their house and car.

Your debts will be gone, at least most of them. You can start with a clean slate. To many, that is a sense of relief.

Disadvantages

You are forced to undergo credit counseling. This is not an option. You might not like being told what to do, you will just have to live with it. This can give you a feeling of no-control for a while. Your financial life will be in the hands of the bankruptcy court and the trustee assigned to your case. If you want to sell something that you own, you must get permission. If you wish to make a payment on something, you have to ask them first. This is only until the bankruptcy is settled.

You may have to sell or surrender things that you do not want to. You can have one car, that means others will be surrendered. Any other real estate beside your house will be surrendered. Recently incurred debts may not be discharged. If you received a large cash advance within seventy days of filing, it is not covered. You may have went out and got a loan for some expensive jewelry. You would still be liable for that debt if it was ninety days or less from filing. You will have to surrender life insurance value. You will also have to surrender stocks and bonds. You cannot keep personal possessions like expensive instruments. The exception would be if they were job related. A musician can keep instruments, for example. You may not be able to keep more than one computer or television either. Assets like checking and savings accounts are monitored. You can keep a minimum amount in them.

Can you file for Chapter 7?

You may not be able to qualify for Chapter 7. If you qualify for Chapter 13, the court will deny your Chapter 7. Chapter 13 allows paying your debts off slowly over several years. Did you have a Chapter 7 discharged less than seven years ago? Did you have a Chapter 7 denied less than six months ago? You cannot file Chapter 7. You may make too much money to file for Chapter 7. The court goes by certain guidelines. If you meet the criteria, you can file.

In closing

Do not get in too big of a hurry to file Chapter 7 bankruptcy. Take the time to find out all about it. Maybe it is just what you need? Maybe it is not.

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