An Up-Close Look at Chapter 7 Bankruptcy

As we start looking more and more at bankruptcy, we realized that we were overlooking some information that’s very important to our readers. We know that everyone is at different stages in their financial blueprint. Right now if you’re dealing with a lot of debt, you might not want to pursue debt consolidation. You might not want to try to run from creditor to creditor and hope that they’ll work with you. No matter what anyone says, if a creditor digs in their heels and decides that they don’t want to negotiate anything with you, they can do that. Technically speaking, it’s not really in their best interest to go that hardcore with you, but sometimes they do that. It means that you might have to file bankruptcy to get out from under the rock of debt. Yet when do you really decide when to file? Do you file when your debt is at a certain number or something like that? You actually want to make sure that you think about the type of debts that you have. If you know that the debts that you have will fall off in a bankruptcy, then it’s really in your best interest to make sure that you really do drop those debts as soon as you can.

But what about bankruptcy? Generally speaking, unless you have a high income, Chapter 7 is definitely going to be the way to go. Why?

It’s simple: Chapter 7 bankruptcy is essentially a very large liquidation sale. You might have seen a few businesses in your area do something like this — they sell off most if not all of their assets and then use the money to pay debts. This is the same principle except that once you go through the process you’re discharged and you come out with a new credit life. Is it all rainbows and sunshine? Definitely not. There are going to be times where you wonder why you filed for bankruptcy at all. Your credit is going to take some time to heal, but that’s okay. The longer it takes your credit to heal, the easier it will be on you to learn new credit habits. You will want to inhale as much as you can on the world of personal finance. Budgeting, saving, stocks, investing, and real estate — it’s all finance, and it’s all things that you will need to know. You might have gotten yourself into high debt because you really didn’t understand everything. Once you’re an adult, the excuse of ignorance is actually not an excuse at all — people will want you to know things. They will expect that you know what you’re doing. If you truly don’t know, then you have no business entering into new agreements, right? Right! That’s why the time after bankruptcy is really a good time to start evaluating your life and figuring out where you want to go next.

The nice part about the bankruptcy laws is that once you do indeed file bankruptcy, all of the collection actions against you stop cold. Creditors and bill collectors aren’t even allowed to call you. They need to do business with your attorney, and trust us — you’ll definitely want to get an attorney. There are some cases of DIY bankruptcy, but playing with your family’s future is not a DIY project that we recommend you take on. it’s better to start thinking about the type of life you want to have, and then realizing that it’s better to entrust your future to a professional that’s definitely “been there, done that” more than just a handful of times. Most attorneys that deal with bankruptcies actually have a lot of experience in the matter, and they can catch things that you might miss otherwise.

What happens in a Chapter 7 bankruptcy is that there is a trustee. What, you didn’t think that the courts would expect you to go through your own assets and sell them, would you? That would be hard to actually make sure that every filer is as honest as possible. Yes, that means that you’re going to have someone getting very intimate with your financial details. In fact, you’re going to have quite a few people that will know the “dirty details” of your debts. However, you can’t get worked up and start worrying about that at all. You want to make absolutely sure that you’re being as open as possible. Just like attorneys, trustees are very good at finding out information. If you are shown to have held anything back in hopes of keeping it — like trying to hide assets with a neighbor or a friend or even a family member, you’re in for a lot of trouble.

You don’t have to lose all of your assets in a Chapter 7 bankruptcy. You will just need to make sure that you actually look into the matter with your bankruptcy attorney.

If Chapter 7 sounds like a breeze, it’s definitely meant to be that way. It’s estimated that over 65% of bankruptcies done are actually under Chapter 7, which means that there are good chances that you’re eligible for this type of bankruptcy. People that own corporations are going to want to choose a different path for removing debt. Bankruptcy is still possible, just not under this code.

Overall, now is a good time to review your options and see if bankruptcy is even the right track for you. Why not check it out today for yourself?