Key Facts You Need To Know Before Deciding To Declare Bankruptcy Under Chapter 7

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When people who owe huge debts default on payments, they get calls and letters from creditors threatening to take legal action. Ultimately, such threats can make you have sleepless nights worrying that you might lose your belongings if you don't get money to repay your debts. Luckily, you can stop your creditors from acquiring your assets and discharge some of your debts by filing chapter 7 bankruptcy. However, before doing so, talk to an attorney to know whether this is the right chapter for your situation. They will want you to know the following facts before filing.

You Need to Know Your Eligibility Before Filing

You need to know your eligibility before declaring bankruptcy under chapter 7. This way, you will avoid wasting your time and resources on a chapter that will not get you out of your situation. In such a case, talking to an attorney is the best way to know whether you qualify for chapter 7. They will evaluate your earnings to determine whether you can afford to pay your monthly bills and debtors. If you can, you might not be eligible for this chapter. 

In addition, you must not have had any proceedings with the bankruptcy court in the last few months if you're planning to declare bankruptcy under this chapter. The court will also require you to take a financial course from an approved agency before rendering your application. Note that if you don't meet these requirements, it might not be advisable to file chapter 7. Instead, your attorney can help you to choose a more appropriate alternative for your situation. However, if you're eligible to file, they will gather and file all the necessary documents the bankruptcy court requires. They will then represent you in your case to ensure you qualify for bankruptcy.

You May Have to Sell Some of Your Property

The laws that regulate chapter 7 require applicants to sell some of their belongings to raise funds to pay their creditors. Therefore, you must be ready to lose your property if you plan to declare bankruptcy under this chapter. However, there are rules on the property and assets the court can use to pay creditors. Therefore, you need to speak to a legal advisor to know the assets you might lose when you file chapter 7.

As the information above shows, chapter 7 is not ideal for everyone. So, it is advisable to speak to a bankruptcy attorney before filing this chapter. Doing so will enable you to know whether there are better options you may consider.  

For more info about chapter 7 bankruptcy, contact a local company.