How Chapter 7 Bankruptcy Works: The Primary Things To Know
Before you use any debt-relief program, it is wise to analyze it first. Analyzing a program helps you learn more about it, primarily to know what to expect. Chapter 7 bankruptcy is one option you can use for financial help, and learning how it works is vital before you file. Here are some primary things to understand about Chapter 7 before you file the legal documents.
Your Income Determines If You Qualify
To file for Chapter 7, you must qualify, and your income is what determines if you qualify for it. Bankruptcy lawyers ask clients to bring their pay stubs and income information to their initial consultation visits to determine if they are eligible. A lawyer can look at your income information and provide an answer right away. If you earn less than the standard amount set in your state, you qualify. If you earn more, you will not be eligible for Chapter 7.
Chapter 7 Eliminates Qualifying Debts
A bankruptcy lawyer will also ask you to bring a list of your debts to your consultation visit. By reviewing the list, your lawyer can tell you which debts qualify for forgiveness. Lawyers typically place debts into two categories. The first category is qualifying debts, and the second is non-qualifying debts. Debts that fall into the first category receive a discharge through Chapter 7. Debts that fall into the second category do not. If you have debts in the second category and file for Chapter 7, you will still owe them after filing. It is vital to tell your lawyer about every debt you have before you file, as this determines if Chapter 7 is an effective solution.
You Must Reaffirm Debts If You Want to Keep Assets
If you have a house or car that you want to keep when filing for Chapter 7, your lawyer will walk you through the reaffirmation of debt process. This process allows you to keep these assets by agreeing to make the scheduled payments. If you cannot afford the scheduled payments, you should not reaffirm the debts. If you are not up to date on your payments, you cannot reaffirm the debts to keep the assets.
You Will Learn How to Manage Your Debts
The last thing to know is that you must take a couple of credit counseling courses with Chapter 7. The purpose is to teach you how to manage your debts and finances to avoid falling into debt again. If you have questions about this branch of bankruptcy, talk to a lawyer today, such as James S Price Bankruptcy Attorney.
