Should You File Chapter 7 Bankruptcy?
If you are considering filing bankruptcy, you may want to consider the benefits when you file Chapter 7 bankruptcy. This term is in use to describe the area of the law that describes
the process for filing bankruptcy. If you are a person or a couple, you may want to consider this type of filing. In this situation, your debts are discharged fully, which means you do not have to repay them once the process goes through. There are good and bad aspects of filing Chapter 7 bankruptcy, though. You should consider both before you start the process.
What Happens?
If you consider the difference between when you should file Chapter 7 and when you file Chapter 13 bankruptcy, you will see why so many people go with this route. In Chapter 7, your debts are completely forgiven and you do not have to repay them at any time after they are discharged legally. In Chapter 13, the same is not true. Rather, in this arm of the legal system, your debts are restructured so that they are easier for you to repay. For example, your credit card debt will have interest rates halted or lowered and your monthly payments will have a design to fit within a specific budget. In Chapter 13 bankruptcy, you still have to repay your debt, but you may have an easier time of doing so. Chapter 7 is more drastic and therefore harms your credit more so, and for longer periods, than Chapter 13 will.
Qualifications and How to File Bankruptcy
The legal system has changed somewhat in the way that bankruptcies are filed. It used to be that to file bankruptcy, you simply needed to file a few forms, state that you could not repay your debt and you were on your way. Now, you have to go through a much more complex type of filing process, often with a range of requirements that make it harder for you to qualify. In this process, the goal is to help you file bankruptcy, but also to protect the credit lenders who were being taken advantage of when people filed bankruptcy by abusing the system.
Here are some of the aspects of filing bankruptcy will be required of you.
- Pass a bankruptcy qualification test which outlines if you have the assets to repay your debts, if you have worked hard enough to repay debts and other aspects
- Work through Chapter 13 or consumer credit counseling first, in some situations, in order to help creditors get the funds they are entitled to whenever possible
- Take financial management courses to insure that you have the necessary knowledge and skills to manage your debts after you file chapter 7.
Businesses
If you are a business, and you need to file for bankruptcy, Chapter 11 is an option for you. In this type of bankruptcy, you will go through the same structure as Chapter 7, but it has a design for businesses rather than individuals. Your business likely will need to go through the process to file Chapter 13 bankruptcy before you will be able to file Chapter 11. Again, this is to help protect credit lenders.
If you are considering if you should file for bankruptcy, a good place to start is with the information provided to you by an attorney. They will help you follow the letter of the law so that you qualify to file for bankruptcy and to insure that every aspect of the process is met. A qualified professional will be able to get you through the process faster and with less trouble along the way to filing.