It is always so important to fully evaluate any branch of bankruptcy before you agree to use it for debt-relief purposes, as there are consequences of filing. If you are currently evaluating Chapter 7 bankruptcy, here are some of the top factors you should know about that will help make this type of bankruptcy a good choice for someone who needs relief from their debt.
The debt is primarily owed on credit cards
One of the huge factors that makes Chapter 7 bankruptcy a good choice or a bad choice involves the types of debts the person has. When a person owes money primarily to credit card companies, this debt is usually dischargable in a Chapter 7 case, which means it is completely wiped away. If you have $40,000 in credit card debts and file for Chapter 7, you could walk away owing nothing.
If the debts are not credit card debts, you should find out if they would qualify for a discharge through Chapter 7. If you discover they are not qualifying debts, filing for Chapter 7 is not going to be very helpful for you in terms of debt-relief.
The person is not facing foreclosure or repossession
A second factor that plays a big role in whether or not a person should use Chapter 7 bankruptcy involves the state of the person's house or cars. If you are not behind on any of these payments and want to keep your house or cars, Chapter 7 might be a great way to do this, as it could eliminate your credit card debt but allow you to keep your house and car. Chapter 7 is not a helpful branch of bankruptcy for a person who is on the verge of losing their house to foreclosure or their car to repossession.
The person has few assets
The other factor that really plays a big role in this decision involves the assets a person owns, and this includes cash on hand, savings accounts, and any items that are worth money. In Chapter 7, you risk losing things you own, as this is the trade-off you have for receiving forgiveness of your debts. Therefore, if you risk losing a lot of valuable things, Chapter 7 might not be the best option.
These are the main three factors that generally make Chapter 7 bankruptcy a good choice. If you meet these factors and want to learn more about Chapter 7, contact a bankruptcy law firm, such as Price James S & Associates.Share