Bankruptcy under Chapter 7 is one of the most effective ways to get out of debt in the United States today. Many people have been able to get out of poverty and start over financially thanks to this programme. By erasing your debts, it gives you a clean slate. However, bankruptcy is a personal decision, and it’s important to weigh all of your options before making a decision. There are both advantages and disadvantages to filing Chapter 7 bankruptcy.
Chapter 13 Bankruptcy: Is It An Option?
Those in need of a fresh start have two powerful bankruptcy options in the form of Chapter 7 and Chapter 13. Filing for bankruptcy under Chapter 13 has distinct advantages and disadvantages from filing under Chapter 7. With a high level of disposable income or non-exempt assets, Chapter 13 might be the best option for you. To learn more about the advantages and disadvantages of filing for Chapter 13 bankruptcy, read this article.
An Expensive Process: Filing for Bankruptcy
For Chapter 7 cases, the bankruptcy court charges a $338 filing fee. Those who earn more than the federal poverty level are required to pay a fee to file their taxes. If you can’t pay the entire fee at once, you can file your case and pay the fee in up to four instalments. Your case will be thrown out if you don’t pay in full.
Paying an attorney’s fee on top of the filing fee is a given when hiring an attorney to represent you in bankruptcy court. In most cases, that works out to about $1,500 before your case can be filed. Additional expenses include filing fees and credit counselling classes, which are mandated by law.
Because of your financial situation and what you hope to achieve through bankruptcy filing, it may be worthwhile to hire a bankruptcy lawyer. a However, many Chapter 7 cases are straightforward and can be handled without the assistance of a lawyer.
Benefits of Filing for Bankruptcy Under Chapter 7?
You are protected from creditors as soon as you file for bankruptcy. When you file for bankruptcy, all collection efforts are put on hold until the automatic stay period expires. There will be no more garnishments or letters of demand. Repossessions, evictions, and foreclosures were all temporarily halted as a result.
A bankruptcy discharge provides long-term debt relief.
The majority of debt, including credit card debt, medical bills, and personal loans, can be discharged in a Chapter 7 bankruptcy. When you receive a bankruptcy discharge, the court removes your obligation to make payments on unsecured debts like these.