Some 47 million Americans lost their jobs over the last year. That rate of 32% is higher than the worst rate of 25% during the Great Depression. With layoffs and downsizing across industries, as well as your mounting bills, you may be looking for a solution that will help you avoid disaster. And that may mean that you’re considering a Chapter 7 bankruptcy filing to help you make a fresh start.
What is Chapter 7 Bankruptcy?
A Chapter 7 bankruptcy is called a “fresh start” bankruptcy, because it may allow you to discharge unsecured creditors and debts while stopping further collections, garnishments, repossessions, and civil judgments. One of the benefits of Chapter 7 bankruptcy is that it can allow you to keep your house and car, but it can also eliminate those bills that you can’t afford.
Who Can File for Bankruptcy?
To determine if you are eligible to file for Chapter 7 bankruptcy, you use a means test, which calculates your debt and income to see if you qualify. If you show a monthly income of less than $7,475, you will probably be eligible for Chapter 7 bankruptcy. If your monthly income falls in a range that’s more than $12,475, you may still be eligible for Chapter 7 bankruptcy if you can show special circumstances.
Of course, even if you are not eligible for Chapter 7 bankruptcy, you may need to consider other types of bankruptcy for your financial situation. A Chapter 13 bankruptcy might be one option that will better meet your needs.
Have You Explored All Your Options Before Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is not for everyone, but it may be one solution to get that fresh start you’re looking for. Before you consider filing for bankruptcy, you might consider if there are other ways that you can achieve debt relief without bankruptcy. Here are a few ideas that you might consider.
- The best first step is to reach out to a legal expert or debt counselor to get individual insight into your debt and what you can do about it. It’s a great way to develop a plan, with specific steps that should help you stay on track. Part of that plan might include bankruptcy, but it’s still best to consider all your options and determine your best course of action.
- Contact your credit card companies and other creditors to find out if there are ways that you can pay off your debt while minimizing further penalties. Depending on your account and coverage, you may already have some coverage for job loss or other mitigating circumstances.
- You can also consider if debt consolidation is an option for you. It’s a great way to put all your debt under one loan, with a more manageable interest rate, so you can keep a better handle on your payments going forward.
How Much Debt Does It Take to File Chapter 7 Bankruptcy?
The amount of debt you need for a Chapter 7 bankruptcy will really depend on your situation. Ohio bankruptcy laws don’t require a minimum debt level for bankruptcy eligibility. While there’s not a minimum amount of debt though, there are other factors that you should consider. That’s why it’s typically best to consult with a bankruptcy lawyer to determine the options that are best for you.
How Does Chapter 7 Bankruptcy Work?
For Chapter 7 bankruptcy to begin, you must first file a petition with the bankruptcy court. With the petition, you’ll include the required paperwork, including:
- schedules that detail your liabilities and assets;
- a schedule that details current expenses and income;
- a statement that details your financial affairs; and
- a schedule that details unexpired leases and executory contracts.
When you’ve submitted all the appropriate paperwork, the Chapter 7 bankruptcy proceedings typically will protect you from further action from creditors. As part of the process, you must submit a certificate to prove that you’ve participated in a credit counseling program.
You’re also required to submit a statement detailing your monthly net income, along with records for any interest in qualified tuition or education accounts. Depending on your personal situation, the filing can become very complicated. Particularly in more complicated cases, you should consider consulting with a lawyer to make sure that you don’t make mistakes.
How Long Does Chapter 7 Bankruptcy Take?
The length of time for a Chapter 7 bankruptcy can vary depending on the complexity of the case, any irregularities in your financial records, and other factors. It could take several months if everything went well, but it can also take much longer.
The length of time until the completion of your Chapter 7 bankruptcy case could also depend on whether you’re waiting for a divorce or other life changes before completing the process. You may find the process much easier post-divorce since you would only be reporting your income and financial situation.
What Does a Chapter 7 Bankruptcy Cost?
Chapter 7 bankruptcy involves a $75 miscellaneous administrative fee, a $245 case filing fee, and a $15 trustee surcharge. In many cases, those fees will be in addition to the cost of your bankruptcy attorney. In most cases, you should at least consult with bankruptcy during the process to ensure that you understand what’s going on and what is required of you.
Next Step: Schedule a Consult with a Chapter 7 Bankruptcy Lawyer
While a Chapter 7 bankruptcy is one of the most common forms of bankruptcy, it’s not without complications. A skilled chapter 7 bankruptcy lawyer can help you understand the bankruptcy process, what’s required, and whether it’s the best option for your personal situation.
With a free case evaluation and debt-relief counseling, a bankruptcy lawyer is the best person to have in your corner as you work to dig yourself out of your current financial situation. Take the guessing and false steps out of the equation. Call a skilled chapter 7 bankruptcy lawyer today to learn how you can get the help you need.