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3 Signs You Should File for Chapter 7 Bankruptcy

Chapter 7 Bankruptcy
After juggling bills and stressing over finances, you might be considering bankruptcy. For someone who is overwhelmed with debt, bankruptcy can be an ideal option. However, even that process can be overwhelming. For example, you could be unsure of whether you should file Chapter 7 or Chapter 13 bankruptcy. This guide lists a few signs that Chapter 7 bankruptcy might be the ideal choice for you.

1. You Have a Limited Income

Of course, many people who find themselves facing bankruptcy are limited in income. However, some individuals who file bankruptcy have higher incomes and are better able to keep up with the three to five-year repayment plans that go along with filing Chapter 13 bankruptcy. Others may not be able to meet these demands.

If you have a lower household income, then you might qualify for Chapter 7 bankruptcy. To see if you qualify, take the means test. Then, you may be able to have some or all of your debts frozen or forgiven without having to worry about paying the monthly payments each month to pay back some or all of your debts.

2. You Don't Own a Lot of Property

A lot of people choose to file Chapter 13 bankruptcy because it allows them to keep their houses, cars, and other properties most of the time. For example, someone who is facing foreclosure might choose Chapter 13 bankruptcy so that they can repay their mortgage payments through their payment plans and still keep their home.

If someone has assets that they own outright, then they may be able to keep the assets if they file for Chapter 13 bankruptcy - rather than selling the assets, as Chapter 7 requires, to help pay back their debts. 

If you file for Chapter 7 bankruptcy and have a lot of assets, then some of these assets might be sold to help repay some of your creditors. If you are facing foreclosure or repossession, then you are still at risk of losing your home or vehicle, since there is no payment plan which will help you caught up on the payments. 

For those who don't have a lot of assets, however, this is not a problem. Therefore, Chapter 7 bankruptcy is often the best choice for individuals who don't own their own home and aren't trying to save their home from foreclosure or car from repossession.

3. You Want to Handle Things Quickly

When you're in a bad financial situation, the idea of filing bankruptcy and getting a fresh start can be exciting. After struggling with bills for months or years, you might be ready for some relief, and you're probably hoping this relief will come fast. If this is the case, then you might find that Chapter 7 bankruptcy is your best choice.

With Chapter 7 bankruptcy, the entire process is usually handled within a matter of months. If all goes well, your debts will be discharged relatively soon. If you file Chapter 13 bankruptcy, however, you'll have to stick to a payment plan for three to five years. Even though Chapter 13 has its benefits, like a smaller impact on your credit score, getting all of your debts behind you quickly is not one of them.

In these scenarios, Chapter 7 bankruptcy may be a better choice for you than Chapter 13. Of course, every situation is different, and it's important to choose carefully when making this decision. This is where a bankruptcy lawyer can help. Contact us at Lynch & Belch P.C. today so that we can schedule you an appointment for a consultation. We'll help you make the best decision for your financial future.