If you’re swamped with debt, and you’re unable to make payment to keep up with your bills think about how you can just snap your fingers and get rid of it. I mean a theory that’s pretty cool, but everyone would be doing that if there was no repercussion for it. Unfortunately, there’s no easy way to get out of debt just by snapping your fingers. But with some laws in place, there are ways where you can get rid of some unsecured debt. Chapter 7 bankruptcy is the most common type of bankruptcy affecting consumers. It’s also known as liquidation bankruptcy because most of your unsecured debt will be discharged. So things that credit card, medical bills, and even personal loans. Chapter 7 bankruptcy is a heavy-hitter, which will leave a huge imprint on your credit report for about 10 years. If that’s the case you’ll find it hard to get a loan and credit cards, adding to the list any type of credit accounts available.

Unlike Chapter 13 Bankruptcy which could take anywhere between three to five years, Chapter 7 bankruptcy can be completed and fulfilled within three to four months. Can you imagine that? Having all your debt dissolve within 3 or 4 months? That’s incredible. So now we’re going to get into the nitty-gritty so you can understand a little bit more about What Chapter 7 bankruptcy is all about.

What is it?

Like we said before, it’s also known as liquidation bankruptcy. So if you tried negotiating and speaking to your creditors to ensure that you can have any negative items removed and even after that you’re still struggling to pay your bills chapter 7 would be something you should consider.

Basically, you snap your fingers and you don’t have to worry about some of the debt that you owe. You fill out the form and you file for chapter 7 bankruptcy with the understanding of some of your assets will be at stake. So think such as you’re home, car, stock and any other of your valuable assets may be used to pay off the debt you owe. And if you’re okay with that then, by all means, do so.

How to Qualify

I’m sure since you landed on this page for wondering if you qualify for Chapter 7 bankruptcy. So here are the few criteria that you need to meet to be eligible for Chapter 7 bankruptcy.

  • Passing the means test (income, assets, and expenses are accessed)
  • Could not have declared bankruptcy for the following: Chapter 7 in the past 8 years and Chapter 13 in the past 6.
  • Could not have filed for bankruptcy petition for either chapter 7 or 13 in the past 180 days and have it dismissed.
  • Debts total more than your annual income
  • Would take 5 or more years to pay off the debt

Pros and Cons

There a lot of pros and cons to Chapter 7 bankruptcy. One of the most prominent Pros the fact that you won’t be bothered by lenders from aggressive collection actions. And also it’ll teach you to discipline where you have to ensure that you’re on a proper schedule with payments and you’re not overspending. I’m actually down the line you’ll be entitled to more lines of credit and personal loans, with an inflated interest rate of course. That alone is enough to keep your display on a proper payment schedule.

Unfortunately, with Chapter 7 bankruptcy, the cons outweigh the pros. Here’s a list of the few things you should know of when you file for chapter 7 bankruptcy.

  • No more credit cards (all will be taken away)
  • Credit takes a hit
  • Likely to lose possessions (car, boat, home)
  • May not qualify for another mortgage
  • Your Chapter 7 bankruptcy can be changed to a Chapter 13 Bankruptcy which intern will not wipe out the tight you all but you’ll be entitled to pay it off within 3 to 5 years.

Filing for Chapter 7 bankruptcy is a serious thing. It’s a strong legal action that has been taken against you for you to saturate any debt that you owe. Potentially all of your valuables or some of your valuables such as property, cash, cars, boat anything like that can be used to pay off the debt you owe. And on top of that, your credit score will take a huge hit.

Bankruptcy isn’t the first resort and should be considered the last resort. Definitely seek some legal advice or some financial help before you consider bankruptcy. Although if you’re in a position where you have the extraneous amount of debt that you can’t handle, a Chapter 7 bankruptcy may be a consideration.

If you haven’t already strong advice taking some legal advice before you make the leap. You can also seek some debt help before you file for bankruptcy.