In general, people file Chapter 7 to eliminate credit cards, medical bills, judgments, repossessions, mortgage deficiencies, and certain personal taxes. A Chapter 7 Bankruptcy also allows you to surrender a house or a car that is worth less than the balance of the mortgage or loan and to terminate a lease early without repercussion.
Once you file a Chapter 7 Bankruptcy, creditors and their collections agents must stop calling you and mailing you bills. Any pending lawsuits and wage garnishments will also stop.
But Chapter 7 comes with conditions. First, some debts cannot be discharged in Chapter 7. This includes student loans, child support, alimony, and recently assessed taxes. Second, you can only file Chapter 7 Bankruptcy if you meet a minimum income test. Third, if you qualify under the income test, you can only keep a limited amount of belongings. Any belongings in excess of the limits may potentially be taken by the Bankruptcy Trustee to pay a portion of your debt.
A Chapter 7 Bankruptcy will stay on your credit report for 10 years. However during that time your credit score will generally improve because the bad credit is no longer used as one of the determining factors. Before long you will be able to get a new credit card and even auto financing.
Chapter 7 Bankruptcy is usually the best choice if you have very few belongings, a limited income, and a large amount of unsecured debt. It is an excellent way for people in that situation to get a fresh start in life.
If you would like to speak with an attorney about Chapter 7 Bankruptcy, call Mark S. Steinberg, P.A. at (305) 671-0015 or fill out the Contact Form to schedule a FREE consultation.