Regain Control of your Financial Future through Chapter 7 Bankruptcy

A sudden major change in one’s financial situation due probably to loss of job or the need to pay child and/or spousal support can be financially crippling, especially if you are paying a mortgage, credit card bills and others bills on top of monthly utility charges. This is a very common scenario involving thousands of American wage earners, who end up being faced with overwhelming debts.

A debt crisis is a major stress, and unless one finds an acceptable way of rising up from surmounting debts, this crisis will continually haunt the person through phone calls at home at the most inconvenient hour of the day or at the office demanding to speak with you to ask you to pay your debts, emails and text messages, and letters from collection firms warning you of the possible lawsuit you can be faced with if you do not start paying immediately.

Those are just some of the harassing tactics employed by creditors, collection firms and agents to make you pay. Scary and embarrassing, definitely! Yet, this proved effective, at least before, when many never knew that there are legal ways that will not only save them from the debts, but which will also put a stop to all forms of harassment; one of these is through Bankruptcy.

Bankruptcy is a legal declaration (either by an individual or by a business firm) of the inability to further pay debts that have worsened to an unmanageable amount. It is one of the legal means that will help individuals (and businesses) rise up from debts and regain control over their finances.

There are different chapters in the Bankruptcy law, each designed to address the specific needs and financial situation of the individual. With the help of a knowledgeable and experienced bankruptcy lawyer, one can effectively assess his/her financial situation and choose the right bankruptcy chapter that can erase some of his/her debts (dischargeable debts, such as personal loans, credit card bills and medical bills which the court may release you from) and render paying the non-dischargeable ones (like alimony, child support, student loans, court fines, and mortgage) in a more affordable scheme.

One particular bankruptcy chapter that a person may be advised to file is Chapter 7. Chapter 7 of the Bankruptcy law can immediately stop all forms of harassment and save the person from all debts to enable him/her to start a new financial life.

Chapter 7, which is a liquidation bankruptcy, is best for people who own a business or who have properties, but whose salary or income falls below this chapter’s stipulated limit. While the court may erase the person’s dischargeable debts, the liquidation of some of his/her properties would be required in order to pay the non-dischargeable loans.

After a court-appointed trustee sells the properties that the debtor is willing to give up, he will then distribute the amount earned to the creditors in payment of the debts; whatever remains from the amount will be returned to the debtor.

Before qualifying for Chapter 7 bankruptcy, however, the applicants will need to take a means test to ensure that his/her income is not above the limit prescribed by this chapter. The business owned by the debtor (if he/she runs a business) may also be required to discontinue operations (unless otherwise decided by the appointed trustee) as the company’s assets will need to be sold.