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Bankruptcy FAQ

When filing Chapter 7 bankruptcy makes sense

On Behalf of | Mar 16, 2020 | Chapter 7

Through no fault of your own, you may find yourself enduring financial difficulties. If you’re behind on payments or have mounting debts, you might be considering bankruptcy. Filing can provide you the relief you need within a short period.

Yet you may lack the ability to pay your debts whatsoever. If so, Chapter 7 bankruptcy could act as a life preserver. If you understand the process and its consequences, it might prove a good way of giving yourself a fresh financial start.

Passing the means test

To qualify for Chapter 7 bankruptcy, you must pass a means test. Most Chapter 7 filers have household incomes below Louisiana’s average, with consideration to their size.

Discharging your debt

Chapter 7 bankruptcy will eliminate all your dischargeable debt. Dischargeable debts are mainly consumer debts. These debts include credit card balances, vehicle loans, home loans and utility bills. Certain debts, like student loans, are not dischargeable. And they still require repayment after filing Chapter 7.

Considering the consequences

Because Chapter 7 erases your dischargeable debts, you will also face the consequences for their non-payment. Your bankruptcy will appear on your credit report for 10 years. You may also lose some of your assets.  And you could lose your home and your vehicles. These prospects may frighten you. But consider that they might also free you from further hardship caused by repayment.

Filing Chapter 7 bankruptcy is not for everyone facing financial challenges. But it may make sense if you have limited ability to pay your dischargeable debts. Working with a bankruptcy lawyer can help you understand if Chapter 7 is the best option for your situation.