Chapter 7 bankruptcy laws mainly cover proceedings involving the discharge of a person’s debt. When filing for Chapter 7 bankruptcy, the person’s debts are forgiven or cancelled. This applies to most, but not all of the person’s debt. Chapter 7 bankruptcy can therefore be an efficient way for a person to handle their debts.
What Are the Effects of Filing Chapter 7 Bankruptcy?
Some of the positive effects of filing for Chapter 7 bankruptcy include:
- Cancellation of a significant amount of the person’s debts
- Temporary suspension of any collection proceedings or foreclosure processes
- Allows for a "clean slate", financially speaking
Some of the disadvantages of filing chapter 7 may include:
- The person may have to sell some of their assets and have the proceeds forwarded to creditors
- Chapter 7 can have negative effects on the person’s credit score
- The person will need to wait 8 years until they are able to file for Chapter 7 again
Regarding this last point, a person should make sure that they want to file for Chapter 7 before they do so. Under Chapter 7 laws, they won’t be able to re-file under Chapter 7 until the required 8 years is up.
Are There Any Recent Changes to Chapter 7 Bankruptcy Filings?
There a few recent changes to Chapter 7 filings. The first is involves different tests to determine whether the person has enough income to shift the case to Chapter 13. This is involves somewhat complex calculations regarding the person’s disposable income compared with personal debts. The assistance of a lawyer may be needed when calculating these values.
Also, there are changes in the way property is valued in a Chapter 7 filing. Before 2005, property was valued according sales auction prices. After 2005, property is valued according to vendor prices. This often results in the more frequent sales of the person’s property for liquidation purposes.
Do I Need a Lawyer for Help with Chapter 7 Filings?
Filing under Chapter 7 bankruptcy laws can often be confusing. You may wish to hire a qualified bankruptcy lawyer in your area if you need help filing a claim. Your attorney can help determine your eligibility for bankruptcy, and can also inform you of any alternative options. Also, your attorney can guide you through the process and assist you with any questions or concerns you might have.