Chapter 7 is the most common type of bankruptcy in the United States with 440,593 filings in the last fiscal year alone. It is looked to not just as a way out of debt, but as a way to start fresh. If you are drowning in debt and are looking for a way to remedy your situation, find out below if Chapter 7 could be right for you.
Reasons To File for Chapter 7
There are many reasons as to why someone would file under Chapter 7. There is no debt limit to adhere to when considering filing, making the amount of debt an individual has a non-issue. Some of the most commons circumstances people find themselves filing from are marital issues, unemployment, large amounts of medical bills, large unexpected expenses, and severely overextended credit.
Chapter 7 is also intended to assist those that have little to no disposable income, or their income is less than the median income of New York.
If you notice your debts add up to over half of your income, get in touch with us today through our website, or give us a call at (917) 909-6166 for a free case evaluation.
Automatic Stay
One benefit of Chapter 7, that can be found in all other chapters is automatic stay. Automatic stay is a protection by the courts against any creditor or lender action against you to collect on any of your debts.
It is put in place as soon as you file your bankruptcy papers and lasts for the duration of the bankruptcy. This can be extremely important when you enter a time where you can finally focus solely on your finances without creditors breathing down your neck 24/7.
Discharging Debts
The biggest and most notable benefit of Chapter 7 bankruptcies is the fact that it has the ability to discharge large amounts of unsecured debt. There are many debts that are able to be discharged without liquidating any of your assets, however, some non-exempt property may need to be turned over. Here are some of the main types of debts that can be discharged by Chapter 7:
- Credit card debt
- Medical debt
- Unpaid rent from an old lease
- Past-due utility bills
- Civil judgments
- Promissory notes
- Personal loans
Even though there are many debts that can be discharged by Chapter 7, there are also types of debt that cannot be discharged:
- Alimony/child support
- Student debt (on most occasions)
- Certain taxes
- Criminal fees
- Court fines/penalties
What Happens To My Credit Score?
One of the most common questions people have about bankruptcy is what happens to their credit score after they file. After filing for Chapter 7, you will be able to access your credit score 90-120 days after you receive a discharge from the bankruptcy. After around 2-3 months, credit scores after filing for Chapter 7 tend to initially dip 100 points and hover around 500-550 for most consumers.
It is true that a bankruptcy will stay on record for 10 years, but that does not mean that your credit score will remain the same for 10 years. Here are some statistics to note:
- Within 1 year of filing, 43% of debtors had a credit score of 640 or higher
- Within 2 years of filing, 65% of debtors found they had a credit score above 640
The key to maximizing a Chapter 7 bankruptcy is by instilling good financial happens when the process is over. Chapter 7 is simply the first step in getting your finances back under your control.
Contact Our New York Bankruptcy Team Today
We understand that troubling financial situations can cause massive amounts of stress in your everyday life. We are committed to using a compassionate and personalized approach to help you find the financial independence you deserve.
If you believe a Chapter 7 bankruptcy could be right for you, do not hesitate to contact us today through our website, or give us a call at (917) 909-6166 to schedule a consultation!
