Chapter 7 bankruptcy is a helpful option for many people struggling with debt because it gets rid of unsecured debts, including credit cards and medical bills, and typically only takes three to six months to complete. It also doesn’t require individuals to enter into a repayment plan like they would have to with a Chapter 13 bankruptcy. To determine if this type of bankruptcy is the right choice, ask yourself the following questions.
Do You Have Enough Dischargeable Debt?
Before you decide to file a Chapter 7 bankruptcy, determine whether or not your debt is dischargeable or not. Certain debts, like child support payments, income taxes, student loans, and court judgments can’t be discharged. If the bulk of the money you owe is dischargeable, it doesn’t make financial sense to choose this type of bankruptcy. On the other hand, if your debts come from credit cards, medical bills, and personal loans, Chapter 7 may be the best choice for you.
Do You Have Nonexempt Property?
Another factor you have to consider before filing for Chapter 7 is what type of property will be taken away by creditors and what you can keep. You can typically retain exempt property, like motor vehicles, part of the equity in your home, and necessary household furnishings. You will likely have to give up nonexempt items, like family heirlooms, a second home, and investments. If you aren’t willing to part with these belongings, you may want to rethink filing for Chapter 7.
Does Your Income Exceed the State Median?
Take a close look at your earnings before you decide to file a Chapter 7 bankruptcy or not. If you still have income left to pay your creditors after you pay your mortgage, car payment, child support, and other necessary expenses, you won’t be eligible for Chapter 7.
If you have determined that a Chapter 7 bankruptcy is your best option, you should consult with an attorney. The legal professionals at The Gil Law Firm have been guiding the residents of Dothan, AL, through the bankruptcy process since 2000. They will take the time to listen to your concerns and provide you with sound legal advice. To schedule an appointment, call (334) 673-0100 or visit their website for more information.