Whether you’re still in pandemic-related debt or have been struggling with bills for some time, filing for bankruptcy is a great route to regain your financial freedom. There are different types of bankruptcy that you can file for depending on your situation, but a Chapter 7 bankruptcy is by far the most popular form of bankruptcy relief for most Americans. In fact, experts estimate that over 39 million Americans have filed for bankruptcy with about 62% of personal bankruptcy cases being a Chapter 7.
If you are struggling with credit card debt, medical debt, car loans, or payday loans, this type of bankruptcy is the relief you’ve been looking for.
Read below to find out if a Chapter 7 bankruptcy is the right choice for you and your family.
What does a Chapter 7 bankruptcy actually do?
Chapter 7 bankruptcy is a powerful tool that can get rid of your unsecured debt relatively quickly, without having to pay it back. It can wipe out credit card debt and medical bills, and can even help if you have outstanding debt on your house or car.
Most Chapter 7 cases take about three to six months to complete and most folks move through the process without a hitch. Then, when the bankruptcy is complete, your debt is discharged and you have a clean slate and a fresh start.
How do I know if I qualify for Chapter 7?
To qualify for Chapter 7, the person filing must pass a bankruptcy means test. A means test determines how much disposable income you have available. If your income is lower than the state’s median income for a family the same size as yours, you automatically pass the means test. If your income is over the state median, you’ll get another chance to pass by subtracting your expenses.
Don’t worry: if you don’t qualify for Chapter 7, you’re not out of options. You can file for a Chapter 13 bankruptcy to repay your debt over time. An experienced TN Chapter 7 bankruptcy lawyer can help you decide which bankruptcy chapter is best for you.
Are there debts Chapter 7 won’t handle?
It would be wonderful if all debts could be washed away somehow for people who are in over their heads. But a Chapter 7 doesn’t necessarily cover every single debt you have. For example, Chapter 7 bankruptcy often doesn’t cover debts such as child support, alimony, student loans, debts from criminal acts like fraud, and some taxes.
Fortunately, there are exceptions to these rules. If these are the kinds of debt you’re struggling with, other types of bankruptcy, like Chapter 13, can help.
Will filing for bankruptcy hurt my credit score?
Many people assume that filing for bankruptcy will hurt their credit. In most cases, that’s simply not true. Will a bankruptcy go on your credit report? Yes. But was your credit good before you filed for bankruptcy? It probably wasn’t. In most cases, filing for bankruptcy neither hurts — nor helps — your credit score.
That being said, once your bankruptcy is complete, you can take immediate steps to rebuild your credit score to the rating you want it to be. Programs like our 7 Steps to a 720 — which is free for our clients — teach you exactly how to make it happen.
Talk to a TN Chapter 7 bankruptcy lawyer Memphis trusts today for FREE.
If you’re considering filing for bankruptcy, our Chapter 7 bankruptcy lawyers would love to talk to you. Our consultations are 100% free, so you can explore your options at no cost. Contact us online or give us a call at (901) 327-2100 to hear how we can help.
For decades, Darrell Castle & Associates has helped people in Tennessee get out of debt. We’re detailed, responsive, and genuinely care about you and your family’s well-being. Don’t just take my word for it though. Click here to read some of our client testimonials.
Give us a call today and discover how we can help you achieve the clean financial slate you deserve.