When people find themselves in a dire financial situation and there’s no other way to progress, many consider filing for bankruptcy. While it’s not something you would want to consider lightly, in some instances, bankruptcy is the only option. However, you might have heard about wiping your debt with Chapter 7 bankruptcy. While there is some truth to this, it’s important to understand how Chapter 7 works.
First of all, Chapter 7 is a bankruptcy option relegated to people who don’t make a great deal of money. If you exceed a certain income threshold, you may be required to file for Chapter 13 instead. This is more of a repayment plan ordered by the court, rather than a legal process to wipe out your debt.
In most cases, especially if there is little to no repayment ability, many of the debts assumed by a debtor who filed for bankruptcy will be wiped out by the courts. However, there are some stipulations to this.
Many people have worked under the false impression that Chapter 7 bankruptcy requires you to sell vital assets to repay creditors. While there are instances in which courts will require you to sell certain assets to repay a portion of your debt, there has been a great deal of misinformation on what the courts consider unnecessary assets.
The first thing to understand is that the courts will not demand you to sell your primary source of transportation to repay creditors. In addition, the court is not going to demand that you sell your primary residence either. In these cases, especially when the individual has no discretionary assets, wiping your debt with Chapter 7 helps you start with a clean slate. However, if you do have inherited assets or have real estate that you aren’t using on a regular basis, you may be required to sell them to pay back some of the debt you owe to your creditors.
You may have many questions regarding the situations in which he courts require you to sell assets. That’s why it’s best to schedule a consultation today with a bankruptcy attorney. These consultations will give you all the information you need about filing for bankruptcy, and the potential need to sell any unnecessary assets.
Visit Stlbankruptcyfirm.com for further details.
