If you are one of the many Americans that feel buried by extensive credit card expenses, medical bills, mortgages, you may have considered filing for bankruptcy. With several types of bankruptcy available, however, you may wonder what type is right for your particular situation. Chapter 7, otherwise known as liquidation bankruptcy, can be beneficial for people who wish to eliminate their debt and begin again with a clean financial slate. There are some things that you should keep in mind, however, before you file for this type of financial relief.
Before filing for Chapter 7, you should make sure you qualify. You must be able to pass a state means test, which compares your income and family size to the state median level. Once you qualify, you may want to decide whether you wish to keep your property, including your home, vehicles and furniture. Under liquidation bankruptcy, the trustee appointed to the case may repossess some of the property listed under your bankruptcy application. There are ways, however, that you can retain ownership of property, such as your home or car. You may be able to resign these loans with the bank, and in some cases, the financial institution will make arrangements to lower your monthly payments and interest rate.
Once you go through the Chapter 7 bankruptcy process, your debts may be discharged. However, there are some debts that cannot be discharged, such as student loans and past-due child support.
This information is intended to educate and should not be taken as legal advice.