Filing for bankruptcy in the U.S. courts provides options to people who are struggling with their debt. If you are considering bankruptcy because of creditor harassment, garnishment, repossession, foreclosure, lawsuits, illness, disability, loss of income, license suspension, or divorce, among others, it is important to seek the help of an accredited debt counselor to explore your options. In many cases, a debt counselor can provide you with solution other than bankruptcy. At SurePath Financial Solutions, we are an accredited non-profit with over 44 years of experience in helping people like you through financial difficulties.
One of the more common types of bankruptcy is known as Chapter 7 bankruptcy. What is Chapter 7 Bankruptcy? Chapter 7 bankruptcy is debt relief plus financial protection.
This form of bankruptcy was designed for eliminating unsecured debt. This includes credit cards, medical bills, utility bills, parking tickets, payday loans, and some personal loans.
A Chapter 7 bankruptcy can include the protections of the automatic stay and specific exemptions. Both programs are part of the bankruptcy code in every state, to help people protect their homes, cars, wages, and other vital possessions from their creditors. These programs are also for preventing foreclosure.
Chapter 7 bankruptcy best applied under the following conditions:
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You have too much credit card and medical debt.
Chapter 7 bankruptcy is designed to eliminate unsecured debt, which includes credit card and medical bills. It is usually fast-acting, and you will not have to wait years for a fresh start. There are still has a number of steps and stages, and each requires completion of filings, processes, and meetings.
By law, all consumers filing for Chapter 7 bankruptcy must complete a debt counseling session prior to filing for bankruptcy and an education program prior to the discharge of their debt. SurePath Financial Solutions is approved to issue both pre-filing bankruptcy certificates and pre-discharge bankruptcy certificates.
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You do not have enough income.
To qualify for Chapter 7 bankruptcy, your income has to be low enough to pass the bankruptcy means test, which is a formula intended to keep those with higher incomes from filing for Chapter 7 when they should be filing for Chapter 13.
If your monthly income is less than the median income for households of your size in the state where you live, then you pass the test and you can file for Chapter 7. However, if your income is greater than the state median, the means test computations are more complicated. You will have to determine whether, after you pay the allowed monthly expenses, you have enough income left over (the so-called disposable income) to pay off at least part of your unsecured debt. If your disposable income is greater than a certain amount, you fail the means test and cannot file for it.
At SurePath Financial Solutions, our debt counselors can assist you gathering the information you will need for the bankruptcy means test which determines if you are eligible to file for Chapter 7 bankruptcy.
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Chapter 7 Bankruptcy and Property Protection.
The property protections under Chapter 7 vary from one state to another, but generally, Chapter 7 gives less protection for property than chapter 13 does. Exemptions of Chapter 7 can allow you to keep your home, your car, and other valuables like work tools, appliances, furniture, clothes, photographs, and books.
Call SurePath Financial Solutions today and speak to one of our debt counselors to assist you in determining if filing Chapter 7 bankruptcy is in your best interest.
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