Everything You Need to Know About Filing for Chapter 7 Bankruptcy

If you are a business owner and you have been considering bankruptcy, you might have been suggested to take a closer look at what is known as Chapter 7 bankruptcy. This special type of bankruptcy process provides a thorough relief from your debt by wiping out your debt and allowing you to have a fresh slate. Chapter 7 is known as “liquidation” bankruptcy. This is the type of bankruptcy that most think about when business bankruptcy comes up in conversation because it is a straight-forward process and one that many people are familiar with.

When you file for Chapter 7, a trustee will be appointed in your case to oversee these important matters. The trustee’s job is to take all of your assets and distribute money that is owed to certain creditors who have filed claims against you. Of course, not all of your property will be taken through this process. You will be left with many assets so that you can have a fresh start, especially when it is not the end of the line for your business.

Pros and Cons

Of course, before you jump into the Chapter 7 bankruptcy process, you might want to take a close look at some pros and cons so that you can become more well-informed when it comes to your filing. Here are some of the negative aspects you might experience if you file:

• Bankruptcy can stay on your credit report for up to 10 years, which might make certain things difficult, such as securing loans.
• If there are personal property items that are not exempt for sale through your trustee, you could lose these items.
• You will lose your ability to retain your credit cards.
• Bankruptcy could make it impossible to get a mortgage.
• You will still have to pay your student loan debt and child support or alimony.
• If you went through similar bankruptcy proceedings in the last six years, you will not be able to go through this process again.

However, there are also many positive aspects that you get to enjoy when you go through this process that could free up some of the stress you have been feeling about your finances:

• There are many state exemptions that will allow you to keep many personal items that will become exempt from the bankruptcy process.
• Even though your future credit cards will come at a higher interest rate, you will be able to apply for them within one to three years of your filings.
• Bankruptcy will help alleviate many of the financial obligations you had.

Do You Qualify?  

On top of all of these other aspects, you might wonder what strict qualifications must be met for you to be approved for Chapter 7 bankruptcy. One of these major aspects is the fact that, if you have filed for bankruptcy in the past, you must wait eight years before you file for another. You must also go through the process of credit counseling and meet qualifications for not having disposable income. These might seem like strict guidelines but they are ones that must be met in the bankruptcy process.

You might have concerns about how the Chapter 7 bankruptcy process works and what requirements you must meet before you are involved in this process. At MJ Watson & Associates, our attorneys are experienced in every aspect of bankruptcy and will help you retain your rights as you move forward during this life-changing time. If you believe that bankruptcy is the right choice for you, you have options. Please contact us at (214) 965-8240.