Chapter 7 Bankruptcy
For many individuals who consider bankruptcy, chapter 7 is still the most common type of bankruptcy.
Chapter 7 bankruptcy is generally ideal for those who have a lot of debt but not a lot of valuable assets.
It's different from the other two types of bankruptcy because it does not involve a structuring or repayment plan.
Rather when one files for chapter 7, debt is excused or discharged.
Not Everything Can Be Included Although it may seem like the ideal filing, it's important for those considering this type of filing to understand that not all debt can be included.
Student loans are one type of debt that cannot be included in filing.
They must be paid regardless of financial circumstances.
However, the federal government offers many types of payment options to help alleviate the strain of student loan debt.
Another type of debt that cannot be included in the bankruptcy is back child support.
Child support is determined by a court to be a parent's financial responsibility to children.
By law, parents are responsible for their children's basic needs until they are legally of adult age or emancipated by a court of law.
Child support is the amount determined by the court to be a fair portion of one's income that is a percentage of the amount of money required to meet a child's basic needs.
Chapter 7 Stays on a Credit Report for 7 -10 Years Legally, credit bureaus can report a bankruptcy for up to ten years, although some stop reporting them after 7.
This means that even though a consumer is no longer responsible for paying back debt discharged through this type of bankruptcy, the bankruptcy itself can still affect credit rating.
Typically, one will not be able to secure any type of new credit card-secured or otherwise-for several months after discharge.
This is because credit card companies like to protect themselves.
Once several months have passed, though, it's not uncommon for credit companies that specialize in bad credit lending to approach those who've recently filed for bankruptcy.
While it's good to secure one or two of these types of cards initially, one must be careful not to repeat the same behavioral patterns that brought them to this place financially to begin with.
Chapter 7 is Not for Everyone For those who have a lot of valuable assets, a different type of bankruptcy may be a better option.
Chapter 7 does not necessarily protect consumers' assets long term.
While it's true that possessions are protected during the initial stay preceding the court hearing, it's up to the court and, in the case of mortgages or car loans, lenders whether or not filers may ultimately keep all of their possessions or be ordered to sell some to re-coop some of the money owed.
Those thinking of filing for this type of protection should consult with a bankruptcy attorney to determine the best option.
Chapter 7 bankruptcy is generally ideal for those who have a lot of debt but not a lot of valuable assets.
It's different from the other two types of bankruptcy because it does not involve a structuring or repayment plan.
Rather when one files for chapter 7, debt is excused or discharged.
Not Everything Can Be Included Although it may seem like the ideal filing, it's important for those considering this type of filing to understand that not all debt can be included.
Student loans are one type of debt that cannot be included in filing.
They must be paid regardless of financial circumstances.
However, the federal government offers many types of payment options to help alleviate the strain of student loan debt.
Another type of debt that cannot be included in the bankruptcy is back child support.
Child support is determined by a court to be a parent's financial responsibility to children.
By law, parents are responsible for their children's basic needs until they are legally of adult age or emancipated by a court of law.
Child support is the amount determined by the court to be a fair portion of one's income that is a percentage of the amount of money required to meet a child's basic needs.
Chapter 7 Stays on a Credit Report for 7 -10 Years Legally, credit bureaus can report a bankruptcy for up to ten years, although some stop reporting them after 7.
This means that even though a consumer is no longer responsible for paying back debt discharged through this type of bankruptcy, the bankruptcy itself can still affect credit rating.
Typically, one will not be able to secure any type of new credit card-secured or otherwise-for several months after discharge.
This is because credit card companies like to protect themselves.
Once several months have passed, though, it's not uncommon for credit companies that specialize in bad credit lending to approach those who've recently filed for bankruptcy.
While it's good to secure one or two of these types of cards initially, one must be careful not to repeat the same behavioral patterns that brought them to this place financially to begin with.
Chapter 7 is Not for Everyone For those who have a lot of valuable assets, a different type of bankruptcy may be a better option.
Chapter 7 does not necessarily protect consumers' assets long term.
While it's true that possessions are protected during the initial stay preceding the court hearing, it's up to the court and, in the case of mortgages or car loans, lenders whether or not filers may ultimately keep all of their possessions or be ordered to sell some to re-coop some of the money owed.
Those thinking of filing for this type of protection should consult with a bankruptcy attorney to determine the best option.