If you are struggling financially and you are in over your head with debt, then know is the time to make informed decisions. Every type of bankruptcy is geared to meet eliminate certain debts, but overall most people would agree that there are more benefits to filing for Chapter 7. For people facing foreclosure, Chapter 13 is sometimes more preferable but in any other case there are more advantages for Chapter 7. If you are not sure which type of bankruptcy is right for you, please do not hesitate to contact a Charlotte bankruptcy attorney from our firm today. We have been assisting families with the bankruptcy process for more than 17 years and we can help lead you towards financial freedom. Our goal is to keep people informed of the many benefits of bankruptcy. Below we have listed the seven major benefits of filing Chapter 7.
Chapter 7 Cases Conclude Much Faster
If you qualify for Chapter 7 and you pass the means test, then the process will move along much faster. With Chapter 7 bankruptcy cases are typically concluded within 5-6 months after you file. While that may seem like a long time to you, the Chapter 13 process typically takes three times longer anywhere between 1-5 years. With Chapter 7 you are able to enjoy the relief of debt elimination sooner and you can move on with your life, all within a few short months.
- Chapter 7 Doesn't Require You to Pay Back Your Debt
With Chapter 13 you are obligated to pay back the creditors a portion of your debts. Chapter 7 however, can completely eliminate all of your unsecured debts. Some examples of unsecured debt would include credit card debt, medical care debts or past due personal loans. With these debts you do not have to set up a repayment plan, they are 100% eliminated. Student loans, taxes and secured debts, including your house or car, do not qualify within Chapter 7. Repayment plans with Chapter 13 bankruptcies take anywhere from 3-5 years to pay off, so you have to wait years for debt discharge.
- Chapter 7 Does Not Include Your Future Income
When you file for Chapter 7 bankruptcy, the courts are only really concerned with the income you have made in the last six months, prior to filing. After you file your petition, the income you make is yours to keep except in matters of inheritance. With Chapter 13 however, any disposable income that you make after you file will be handed over to the creditors as part of your "bankruptcy estate."
Chapter 7 Typically Allows You to Hold Onto Your Assets
Many people are under the impression that you lose your property or other valuable assets when you file for Chapter 7. In the majority of Chapter 7 cases, you are able to eliminate your debt and keep all your assets. While there is a small risk that you could lose some non-exempt property with Chapter 7, the chances are slim. Typically in about 90-95% of all Chapter bankruptcy cases the applicant doesn't have to give up a thing unless the property has been pledged as collateral for a loan.
- Chapter 7 Has Lower Legal Fees and No Monthly Payments
Due to the fact that Chapter 7 cases are resolved within a few short months, your attorney fees will be much lower than if you were to obtain them for several years for a Chapter 13 case. With Chapter 7 there is also no required monthly payment, all your secured debt is eliminated and that is the end of it. Chapter 13 requires that you pay timely monthly payments to court which goes straight to the creditors as part of your repayment plan. If you stop making payments or you are always late, your bankruptcy case could be dropped altogether.
- Chapter 7 Cases Help Your Credit Score to Recover More Quickly
The truth of the matter is that it is difficult to obtain loans and financing options while you have an active bankruptcy case open. Chapter 13 cases may take several years to conclude both with Chapter 7 your case is over before six months and your credit score can begin its recovery process. There is no doubt that any bankruptcy on your credit history report will be damaging, but every day that passes by after you case is closed will only improve your chances of obtaining new financing. Many people who file for Chapter 7 begin to see an improvement in their credit score after only 12 months from the conclusion of their case.
- Chapter 7 Does Not Require a Minimum Debt Amount
You do not have to have a certain amount of debt in order to be able to file for Chapter 7. You do have to pass the means test in order to qualify. If they find that you would have sufficient amount of disposable income each month in order to complete a Chapter 13 repayment plan, then you may not be eligible for Chapter 7. With Chapter 13 you must fulfill a debt amount criterion by having below $1,000,000 in debt. Of that $1,000,000 you must have less than $250,000 of unsecured debt and under $750,000 in secured debts.
If you are facing serious debt problems and you would like to find out if Chapter 7 is right for you, then speak with a Charlotte bankruptcy lawyer from Jack G. Lezman, P.A. today!