Thursday, June 27, 2013

Chapter 7 Bankruptcy in a Nutshell

If you are like most people, you probably never gave much thought to bankruptcy—unless you found yourself with significant money problems. But if you are already to the point of being overwhelmed financially, it can be very daunting to try and figure out the implications of declaring bankruptcy while dealing with all your other stresses. This is one reason why it can be beneficial to set up a consultation with a Chapter 7 attorney in St. Louis. An experienced attorney can help you understand what in the world “Chapter 7” refers to and provide other valuable advice on bankruptcy. Here are a few basics to understand before meeting with an attorney.

·         Types of Bankruptcy: There is more than one way to file for bankruptcy, and these options are referred to as “chapters” in U.S. bankruptcy code. The types of bankruptcy filings that are relevant for most individuals are Chapter 7 and Chapter 13.
·         Eligibility: Chapter 7 bankruptcy is available to individuals whose average monthly income levels in the six months prior to filing are lower than a certain threshold and who do not own significant assets. Individuals who have substantial investments or make more money than this threshold amount may still be able to file for bankruptcy, but they will typically have to use Chapter 13.
·         What Happens to Debts: If you file for Chapter 7 bankruptcy, most of your unsecured debts will be canceled immediately. Secured debts—loans that are connected to physical collateral like a home mortgage or car payment—cannot be directly eliminated because the creditor legally owns that property. However, filing can be very beneficial in helping manage this type of debt, especially since many other financial obligations will be negated.
·         What Happens to Your Property: In exchange for eliminating your debts, the bankruptcy court is legally entitled to sell any of your non-exempt property to pay back your creditors. However, most Chapter 7 cases are considered “no asset,” which means all of the individual’s property was covered by exemption laws and thus protected from creditors.

This is a very basic introduction to a complicated and powerful area of the law. To determine whether this option makes sense in your situation, contact a Chapter 7 attorney in St. Louis.

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