Many people have financial difficulties caused by events that are not within their control, such as medical debt, high credit card payments, or other circumstances that make them unable to work and pay their bills, for example. You may benefit from the fresh start that bankruptcy can provide.
If you qualify, you can file a petition for Chapter 7 bankruptcy in the bankruptcy court where you reside. In addition to the petition, you must submit financial documentation which includes your assets and debts, as well as income and expense statements.
After the petition is filed, an automatic stay applies which means that creditors cannot collect debts against you, which includes calling you, starting wage garnishment or filing a lawsuit.
The court will appoint a bankruptcy trustee and they will identify assets that you are allowed to keep. The remaining assets are liquidated to pay creditors based on priority. Once this process is complete, you will be relieved of the responsibility to pay any other discharged debts.
While filing for Chapter 7 bankruptcy can affect your credit, there are several benefits to filing. The primary benefit is that you can keep some assets that are considered essential to maintain your basic standard of living.
You may be required to participate in financial counseling as part of the bankruptcy process. Initially, it may be difficult to discuss your debts with a debt counselor, however the financial education you receive can provide you with the budgeting, money management and financial planning knowledge you’ll need going forward.