Debts are troublesome as they rob you off your financial stability and force you to slide into a financial mess, the consequences of which haunt you for several years. Chapter 7 bankruptcy stays in your credit report for a period of 10 years. This can be avoided by opting for the bankruptcy alternatives that can make you debt free in a systematic manner. However, there are many debtors that don’t have any other option but to file bankruptcy.
Majority of the consumers file either Chapter 7 or Chapter 13 bankruptcy. Filing bankruptcy has become a lot more difficult with the introduction of New Federal Bankruptcy Laws that were introduced on October 17th 2005.
Types of debts that can be dealt with in Chapter 7 bankruptcy:
You can do away with your unsecured debts when you file Chapter 7 bankruptcy. These may include the following –
• Payday loans
• Credit cards
• Medical bills
• Utility bills etc.
As far as eligibility is concerned, in order to file Chapter 7 bankruptcy, you have to qualify in the Means test. When you take the Means test, your income is compared to the income of a similar household in the state in which you are residing. If your income is less than the state median income, you are eligible for filing Chapter 7 bankruptcy.
Get the protection of Automatic Stay:
When you file Chapter 7 bankruptcy, a court appointed trustee will sell off your non-exempt assets so that your creditors can be paid off. One of the most important aspects of filing bankruptcy is the Automatic Stay that prevents your creditors from coming after you to collect their dues.
Undoubtedly, filing bankruptcy (any type) causes lasting damage to your credit rating but it is not the end of the world. There are many ways you can repair your credit rating but it is definitely a time consuming process as there are no shortcuts to a debt free life.