Chapter 7 Bankruptcy: Discharge Your Debts and Get a New Start
Chapter 7 bankruptcy allows an individual or couple to wipe out debt in exchange for giving up some kinds of property, which is sold to pay off creditors. However, in most cases, all of your property will be exempt from sale, and you will be able to keep it.
Chapter 7 is appropriate for those who:
- Own little property beyond basic necessities like clothes, furniture, etc.
- Do not have secured debts like a mortgage or auto loan.
- Have little or no money left after paying basic expenses (rent, utilities, food, etc.).
In order to qualify for Chapter 7 bankruptcy, you must meet a “means test.” Under the means test, you must demonstrate that either:
- You do not have enough disposable income left to pay off your debts after you have paid for necessary living expenses; OR
- Your income is below the median in your state. The annual median income for a Colorado family of 4 in 2011 was approximately $83,967, for example. In addition, those filing for Chapter 7 bankruptcy must complete a credit counseling briefing and a Debtor Education course.
What will Chapter 7 Bankruptcy Do For You?
When you file for Chapter 7 bankruptcy, you:
- Receive immediate relief from debt collectors.
- Have all current unsecured debts (like credit card debts) eliminated in 4 months.
If you have non-exempt property, the bankruptcy trustee will sell it to pay off your creditors. A Chapter 7 bankruptcy will appear on your credit report for 10 years, and you can only file for Chapter 7 bankruptcy once every 8 years.
Contact Bankruptcy Law Professionals of Colorado to get a free consultation and find out if Chapter 7 bankruptcy is a viable option to improve your financial situation.