Chapter 7 bankruptcy will leave a serious mark on your credit reports for 10 years. Read on to learn about how you can qualify for Chapter 7 bankruptcy, how to file, whether this debt relief option is right for you, and how to rebuild after bankruptcy. To qualify for Chapter 7 bankruptcy you:. Must pass the means test , which looks at your income, assets and expenses. Cannot have completed a Chapter 7 in the past eight years or a Chapter 13 bankruptcy within the past six years.
Cannot have filed a bankruptcy petition Chapter 7 or 13 in the previous days that was dismissed because you failed to appear in court or comply with court orders, or you voluntarily dismissed your own filing because creditors sought court relief to recover property they had a lien on. You can probably complete the process within six months. You'll have to follow several steps.
Credit counseling: You must complete pre-file bankruptcy counseling from a qualified nonprofit credit counseling agency within days before filing. Find an attorney: Before diving into the various forms required to file Chapter 7, find a qualified bankruptcy attorney to help. Missing or improperly completed paperwork can lead to your case being thrown out or not having some debts dismissed. File paperwork: Your attorney will help with filing your petition and other paperwork.
An automatic stay goes into effect at this point, meaning that most creditors cannot sue you, garnish your wages or contact you for payment. You have to disclose these activities in your bankruptcy paperwork and your trustee will ask you about them. Also, if you owe your landlord money and you don't plan to move, try to catch up on missed rent payments before filing. The same generally goes for car loans, if you want to keep the car.
Finally, if you expect your financial situation to get worse, then you may want to delay your filing. Upsolve Community Member My house is paid off. If I file chapter 7 can they take my house? Can someone plz help me out with what ill need to file chapter 7 see more.
The main difference between Chapter 7 and Chapter 13 bankruptcy is that in Chapter 13 bankruptcy, you don't immediately erase any debts. You propose a repayment plan based on your ability to repay certain debts. Most people file Chapter 13 bankruptcy instead of Chapter 7 for two reasons. If you're considering filing Chapter 13 because you don't pass the means test, look at the reasons you aren't passing.
The lookback period for the means test is 6 months, so if you recently experienced a drop in household income, you might qualify for Chapter 7 in the near future.
Filing Chapter 7 bankruptcy involves collecting information about yourself your income, your expenses, what you own, and who you owe and using this information to fill out your bankruptcy forms. Whether you plan on filing now or aren't sure yet, check out Upsolve's Step Guide on How to File Bankruptcy for Free to learn more about how to prepare for and file a Chapter 7 bankruptcy case.
The meeting with the trustee who oversees your case takes place about one to two months after you file. This means that that Chapter 7 bankruptcy from beginning to the discharge of your debts takes about months. People who are on social security or unemployed usually qualify for a fee waiver.
You can pay the fee in installments if you make a request and the court agrees. You can also qualify for a fee waiver for these courses, based on your income. If you hire an attorney, the most expensive cost in bankruptcy is your attorney fee. Most people who file Chapter 7 bankruptcy feel a sense of relief that all of their credit card and medical debt, along with other dischargeable debt, is totally gone.
Many people see their credit scores improve if they had credit scores in the sub range. The bankruptcy process often creates a new sense of confidence, where people feel more comfortable with their financial affairs than when they began. Part of the reason is the two required personal finance courses. Chapter 7 bankruptcy also forces you to reflect on your financial situation. People who file Chapter 7 bankruptcy usually get more serious about budgeting, saving, and rebuilding their credit , using tools like credit builder loans and secured credit cards.
Chapter 7 bankruptcy stays on your credit report for 10 years, but many people who file see their credit improve and are able to get approved for a mortgage within a few years if they make good financial decisions post-bankruptcy. Alternatives to bankruptcy may be able to help you get the fresh start you need. Depending on your financial situation and the goals you want to accomplish with your bankruptcy filing, hiring the right bankruptcy lawyer for your case can be a great investment.
But, a lot of Chapter 7 cases are simple and can be successfully completed without a lawyer. There are many things to consider when deciding whether to file bankruptcy. Your decision will greatly depend on your personal situation and what your goals are for your financial future. Attorney Andrea Wimmer. Andrea practiced exclusively as a bankruptcy attorney in consumer Chapter 7 and Chapter 13 cases for more than 10 years before joining Upsolve, first as a contributing writer and editor and ultimately joining the team as Managing Editor.
While in private practice, Andrea handled Take our screener or read our bankruptcy F. Upsolve is a c 3 nonprofit that started in Our mission is to help low-income families who cannot afford lawyers file bankruptcy for free, using an online web app.
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Filing Guide. In a Nutshell Filing for bankruptcy offers a powerful way to eliminate debt and get a fresh start. Join Expert Community. How many points can you lose? It will vary depending on your current scores and other factors relating to your financial situation.
While the impact to your credit can decrease over time, your scores will probably take the biggest hit upfront. Chapter 7 bankruptcy stays on your credit reports for up to 10 years.
Remember that no matter what the impact, your credit can be improved with time and effort. By practicing healthy financial habits — paying bills on time, keeping credit card balances low, and trying not to apply for multiple new loans or credit in a short period — you can eventually build your credit. Filing Chapter 7 bankruptcy is a serious legal action. It can lead to losing valuable property, cash and other assets and can cause a major hit to your credit.
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