One of the earliest and most vital decisions a person must make when filing for bankruptcy is to choose which type to file. For many, especially those who can’t pay their debts, chapter 7 bankruptcy provides the ideal way to reclaim one’s life by eliminating debt. Here, clients can learn how this bankruptcy chapter works.

How Chapter 7 Works

In a chapter 7 bankruptcy case, the court will wipe out unsecured debts such as old medical bills and credit card balances. In return, the filer must give up some of his or her assets, which are sold to repay creditors. A Chapter 7 case includes the automatic stay, which puts a stop to collection activities such as lawsuits, phone calls and wage garnishments.


When is Chapter 7 Bankruptcy the Right Solution?

Chapter 7 is intended for those who cannot afford to pay their unsecured debts, and aren’t expected to gain that ability in the future. Many people who’ve experienced an unexpected medical situation or a job loss find that Chapter 7 is the only way to get things back on the right track. If someone is making no progress on their bills, and they can’t afford to make even the minimum monthly payment, Chapter 7 may be the right kind of bankruptcy to file.

Who is Eligible for Chapter 7?

A borrower who makes less than the state’s median income is automatically eligible to file for Chapter 7. Those who make more than the state median must submit to a means test, which ensures that they’re not trying to abuse the system. A bankruptcy attorney can determine whether a client qualifies for debt relief through Chapter 7, and those who are deemed ineligible may be able to file for Chapter 13 instead.

Ineligibility After a Previous Discharge

A client cannot get a Chapter 7 discharge if he or she got a previous debt discharge within the past eight years, or a Chapter 13 bankruptcy within the past six years. Consult a bankruptcy lawyer to learn about filing a second or subsequent bankruptcy.

With offices nearby, bankruptcy attorneys offer comprehensive debt help services to borrowers who struggle to pay their bills. Visit the website to learn about the differences between Chapter 13 and Chapter 7, or call the office today to set up a consultation. With a lawyer’s help, a client can get the fresh start they need to live a financially sensible life.