Chapter 7 bankruptcy can be a lifeline for borrowers who have excessive debt. However, the process is often confusing, and many petitioners aren’t sure where to start. If you’re unable to keep up with your financial liabilities, here are answers to some common questions you might have about bankruptcy to help inform your conversation with an attorney.

Answering Common Questions About Chapter 7 Bankruptcy

What does it do?

If you don’t have the financial resources to keep up with your unsecured debts, 7 can completely eliminate your obligation to repay. The program discharges credit card balances, personal loans, medical bills, and a wide range of other unsecured debts. In exchange, the trustee of the court may have the right to seize some of your assets to pay back your creditors.

Will I lose all of my belongings?

While the trustee may seize your assets, state law allows you to exempt a wide range of property. These exemptions cover some equity in your car or home, tools and equipment, and even personal possessions like jewelry. Many petitioners can get the debt relief they need without surrendering anything at all.

Can anyone file for chapter 7 bankruptcy?

Chapter 7 bankruptcy is reserved for those who can’t keep up with their debt payments. To qualify, you’ll have to pass a means test to prove that paying off your debts is impossible.

If your monthly income is below your state’s average, you’re automatically considered eligible. If your earnings are above the mean, you’ll have to prove that your obligations exceed your monthly pay.

Does it prevent foreclosure?

Chapter 7 bankruptcy only clears unsecured debts, so it can’t permanently prevent foreclosure. However, filing for bankruptcy does trigger an automatic stay that puts an immediate stop to all collections activities, including foreclosure. This stay period can give you some time to figure out other arrangements or work with your lender to create a repayment plan.

If you have debts you can’t repay, Anderson Law Firm is committed to providing the effective, detailed legal services you need. They’ve been serving borrowers throughout the Archdale, NC, area for over 20 years, and will help you get the second chance you deserve. Visit their website for more on their financial services, and call (336) 431-7336 to schedule an appointment.

The information contained in this site is for general guidance on matters of interest only. The application and impact of laws can vary widely based on the specific facts involved.  We are a Debt Relief Agency.  We help people file for Bankruptcy Relief under the Bankruptcy Code.