The thought of filing for bankruptcy is a frightening one for many. However, there are a lot of myths associated with bankruptcy that need to be dispelled. Here’s the truth about Chapter 7 bankruptcy, and how to take control over your financial future.
1. All of Your Debts Will Be Erased With a Chapter 7 Bankruptcy
While many of your debts will be discharged if you are successful in filing a Chapter 7 bankruptcy, not all of them will be. Unsecured debts are often discharged, but secured debts (like student loans) are not. You will still owe student loans and other secure debts after your Chapter 7 bankruptcy is approved. Additionally, if you intentionally max out your credit cards right before declaring bankruptcy, you may be found liable for those debts as well, even though they are unsecured.
2. You Will Lose All of Your Possessions
In a Chapter 7 bankruptcy, any non-exempt property and assets are liquidated and the funds are used to satisfy as many debts as possible. However, this does not mean that all your property and assets will be taken. You can list much of your property as exempt with the help of a skilled bankruptcy lawyer, including your home, vehicle, and other items that are necessary for daily living.
3. You Can’t File a Chapter 7 Bankruptcy Unless You Pass the Means Test
Typically, you must pass what is called a “means test” to file a Chapter 7 bankruptcy in order to ensure that your income is not too high. However, if you do not pass the means test, this does not automatically preclude you from filing a Chapter 7. If you have significant debt, you may still qualify. A seasoned bankruptcy attorney can assist you in determining whether Chapter 7 bankruptcy is right for you.
4. Chapter 7 Bankruptcy Will Ruin Your Credit
While it is true that a Chapter 7 bankruptcy stays on your credit report longer than a Chapter 13 bankruptcy, this does not mean that your credit will automatically be destroyed if you file. Your credit may take the initial hit, but over time you will be able to build your credit back up to an average/good score. What many people don’t realize is that a Chapter 7 bankruptcy will often hurt a credit score less than the debt would if it was allowed to stay on their report.
Contact a Skilled Chapter 7 Bankruptcy Attorney Now
If you are struggling with debt, you are not alone. Many Alabama residents have difficulty making ends meet, but it is possible to start over. At the Law Firm of Ted Williams, Jr., we understand that each situation is unique, and we are able to provide comprehensive legal guidance throughout the process of filing for Chapter 7 bankruptcy. Contact us today to schedule a consultation by calling (205) 623-4443.