If you find yourself in a bad financial situation, it never hurts to learn more about Chapter 7 bankruptcy. While you may never go down this path, it could be the strategy you need to get your finances back in order.
Many people gravitate toward Chapter 7 bankruptcy because it provides them with a fresh start. With some of your debts discharged, it's much easier to get back on track financially.
There are other reasons to file for Chapter 7 bankruptcy, including but not limited to:
- Prevent foreclosure: If you've received a foreclosure notice from your mortgage lender, filing for Chapter 7 bankruptcy can stop the process for the time being. This gives you enough time to work things out often while remaining in your home.
- Keep future income: This is in contrast to Chapter 13 bankruptcy in which you must use future income to make payments for three to five years. With Chapter 7 bankruptcy, all of your disposable income is yours to keep.
- No limit on how much debt you can have: This is a big benefit when compared to Chapter 13, as you don't have to concern yourself with exceeding any debt limit.
- It's fast: When you're facing financial trouble, you want to move fast. The Chapter 7 bankruptcy process typically takes anywhere from three to six months, with the discharge of debt often happening within three months.
- Avoid wage garnishment: If you're concerned about a wage garnishment, the automatic stay protects you from this for the time being. Once again, this allows you to stabilize your finances as you attempt to get back on track.
Filing for Chapter 7 bankruptcy is a big financial decision, but once you compare the pros and cons you'll feel better about what's to come. Even if you don't file right away, the information you gather will help you keep your options open in the future.
If you're interested in filing for Chapter 7 bankruptcy, organize your finances and then learn more about your legal rights and how to start the process.