Times are getting tougher out there; money is tighter and wages are slim. If you’re in a position in which you’re unable to repay your outstanding debt, you might have considered filing for bankruptcy—that is, declaring in the eyes of the law that you are unable to pay your debt. While to many, significantly reducing or eliminating all monetary debt might seem like a dream come true, it isn’t something to take lightly. It does come with heavy consequences to your credit. Only a trusted bankruptcy lawyer or business lawyer like those at JD Haas can help determine if the process is right for you and your financial situation.
That being said, it never hurts to educate oneself. That’s why we discuss the basics of Chapter 7 bankruptcy, which for some, can be a route out of steep debt and into financial well-being.
What is Chapter 7 Bankruptcy?
As stated above, bankruptcy as a whole is defined as being legally unable to pay one’s debt. However, there are certain subsets of the concept designated by chapters. Chapter 7 bankruptcy involves the liquidation (selling) of one’s assets to pay down creditors, though certain debts cannot be repaid this way.
An independent trustee (not your lawyer or an employee of the bankruptcy court) is appointed to sell your possessions. This trustee will not, however, sell all of your things—just enough to give you a new beginning. Certain accounts and assets are always protected from being sold for Chapter 7 bankruptcy purposes, but these can vary depending on your state. A professional debt lawyer can give you the specifics.
Despite these exemptions, it’s important to understand that filing a Chapter 7 bankruptcy often results in a significant reduction in one’s physical possessions. You must be prepared for this; a compassionate debt attorney can help.
It’s also crucial that you understand the consequences of bankruptcy in terms of your financial future. Again, only a debt lawyer can make recommendations for your individual case, but bankruptcy typically significantly reduces one’s credit score and could discourage creditors in the future from lending to you. If you are offered a loan in the future, it most likely will be at a steep interest rate. In short, Chapter 7 bankruptcy comes with significant consequences, but for some, it can be the only way to save themselves from crushing financial burdens.
Is Chapter 7 Bankruptcy Right for You?
It’s a complicated question. The team of professional attorneys at JD Haas is here to help answer it. Give our Minneapolis office a call today at 952-345-1025.