Is What happens when you file chapter 7 bankruptcy?
This form of debt relief is the most common type of personal bankruptcy. It can be filed once every eight years and takes approximately four months from filing to completion. Your eligibility to file is determined by your income and affected by your assets. You are allowed certain exemptions for the items you own. An exemption allows you to protect a legally limited net value in certain things which may include:
- Equity in your home
- Equity in your tangible personal property (cars, furniture, clothing, etc.)
- Intangible personal property (bank accounts, stock, tax refunds, cash, debts owed to you, etc.)
- In most cases, your retirement accounts
- Other exemptions may be available
Even though you protect the equity in an asset, you may still owe money on it. To keep the asset, you will need to continue to pay the debt; examples are: car loans, mortgages, and other secured loans. If a debt is secured by a lien on property, or an item that is essential to your livelihood, you can reaffirm it. A reaffirmation agreement is an agreement between you and your creditor that allows you to keep the debt as if you had not filed bankruptcy on it. To reaffirm a debt:
- The creditor must be agreeable
- Your payments must be current
- It must be affordable to your budget
- It must be in your best interest
Our office is ready to answer your questions and we will help you determine whether a chapter 7 bankruptcy is best for you.