Chapter 7 bankruptcy is what is known informally as a “fresh start” bankruptcy. This is because if you’re struggling under a pile of debt, Chapter 7 can clean up all your debts and give you a clean slate to begin rebuilding your finances with.
What is Chapter 7 Bankruptcy?
Under Chapter 7, the trustee takes all your assets and sells assets that are not exempt. From the proceeds of the sales, the trustee pays debtors any amount that is exempted. The rest is distributed among your creditors.
What’s great about this provision is that you can wipe many of your debts clean and begin again. Your creditors are taken care of. However, there are some cases in which Chapter 7 is not the best option for you.
When Can You Apply for Chapter 7 Bankruptcy?
blclawcenter.com will tell you about cases when Chapter 7 is NOT permitted. For example, you cannot ignore your mortgages or business payments, if you want to keep your property. If this property is not covered by your bankruptcy exemptions according to the California law, chapter 7 will not help you. Under Chapter 7, your property will be liquidated. If you don’t want that, you should apply for Chapter 13.
Chapter 7 is for you if you want to shed off the heavy debt of your burden without having to pay for it. If you have too much income, you may not be allowed to file for Chapter 7. Chapter 7 also doesn’t help you with nondischargeable debts like some taxes.
The disadvantages of chapter 7 is that your non-exempt property will be sold. You may have to sell your home or car, if it is not exempt. Your home about to be foreclosed will not be fully protected by the Chapter 7 filing automatic stay.
Despite these disadvantages, find out if chapter 7 bankruptcy is for you, and then take control of your finances.