At a certain point, when the collections tactics and the pressure of mounting payments from being overwhelmed by debt have piled up for long enough, most people will consider filing for some form of bankruptcy. Clearly, this is not a decision to be taken lightly, and even a successful bankruptcy cannot solve all of your woes. Still, the power of the government to grant debt relief is an important one, and with proper preparation, a bankruptcy can help you get your affairs back on track.
If you have been considering filing a Chapter 7 bankruptcy, it's important to have a good understanding of what it does and does not do. Under Chapter 7, an individual is allowed to discharge debts in exchange for surrendering many kinds of personal property to a specially appointed trustee. The trustee holds property and administers it to make back money on behalf of creditors. Chapter 7 is attractive for many who are researching bankruptcy because it allows for the petitioner to retain many kinds of property, up to a certain value, especially if that property is deemed vital to his or her livelihood.
However, Chapter 7 is not a one-size-fits-all solution. You will have to take a means test, to ensure you don't make too much or have too many assets for this type of bankruptcy. To be approved for a Chapter 7 procedure, you will have to make your case before a judge, explaining how you came to be in the needful position of filing for bankruptcy. Being granted the procedure will be up to the discretion of the judge hearing your case. Also, Chapter 7 is not able to discharge student debt, and even if you are granted a Chapter 7 procedure, you may still be required to pay off many of your debts after the procedure has been completed. It really depends on the specifics of your situation.
If you are considering any kind of bankruptcy, it is wise to proceed cautiously with the counsel of an experienced attorney who can help you understand the finer points of your particular case and how each form of bankruptcy may best serve your needs. If you believe that a Chapter 7 bankruptcy may be right for you, an experienced attorney can guide you through the process and ensure that your rights remain protected.
Source: Findlaw.com, "Pros and Cons of Declaring Bankruptcy under Chapter 7," accessed Nov. 10, 2016