All the Questions to Help You Know If You Need Chapter 7
If you’re struggling with debts you can’t pay, you may wonder whether bankruptcy is a good option for your situation. Perhaps you’re asking, “Do I need a Chapter 7 bankruptcy? And if so, what would it mean for me?”
Here’s what you need to know.
Understanding Chapter 7 Bankruptcy
There are two different types of bankruptcy: Chapter 7 and Chapter 13.
Chapter 7 offers a fresh start and an opportunity to get out of debt completely. With the help of a bankruptcy trustee and the court, you can get rid of your unsecured debt – including credit card debt, medical bills, and personal loans.
Because federal law oversees the Chapter 7 process, it’s binding. It stops creditor harassment and wage garnishment immediately.
Below are some of the questions you can ask to understand better whether Chapter 7 is right for you.
Is My Debt Overwhelming?
Are you struggling with unmanageable debt? This might include credit cards, medical bills, or personal loans.
Debt is an incredibly common problem in the United States, with serious consequences. 3 in 5 Americans have credit card debt and owe an average of $5,875. In addition, 23% go further into credit card debt every month.
Similarly, over 100 million Americans have medical debt, or 41% of adults. These debts can range from $500 to tens of thousands. 12% of medical debtors owe over $10,000.
So if you have a lot of debt you can’t pay back, know that you’re not alone. And Chapter 7 bankruptcy is a great tool to help.
Do I Qualify for Chapter 7?
To figure out whether you qualify, a bankruptcy attorney will do a means test. Basically, we look at your income, expenses, and family size. If your income is below the state median or you pass the means test, you’re likely eligible for Chapter 7.
Fortunately, even if you don’t qualify, you may have other options.
Is My Debt Mostly Unsecured?
Are the majority of your debts unsecured? Unsecured debts include credit card debt, medical bills, and personal loans.
If most of your debt is in assets like a home or car, a different chapter of bankruptcy might benefit you more (Chapter 13 helps stop foreclosure and repossession). Which chapter you choose will depend on your goals and the types of debt you have.
Am I Facing Creditor Harassment or Wage Garnishment?
Are you dealing with relentless creditor calls, lawsuits, or wage garnishments that affect your financial stability?
Chapter 7 puts a stop to all of these issues immediately. So not only do you get a fresh start, but you get to keep your paycheck moving forward and rebuild some peace in your life.
Have I Considered Alternatives?
For smaller debts or debts with a specific creditor, you may have some alternatives to consider in advance of a bankruptcy. For example, some people are able to negotiate with their creditors or bank. In the case of medical debt, some hospitals will work with you to figure out a reasonable payment plan.
Just keep in mind that these alternatives don’t have the power of federal law behind them, so they aren’t binding. You want to make sure you can trust the organization so you don’t end up right back where you started.
Have I Consulted with a Bankruptcy Attorney?
Bankruptcy is a serious decision, and picking the right chapter can make a huge difference in your future.
The bankruptcy chapters each take a different amount of time, require different qualifications, and can impact your assets. So you need someone on your side who understands the law and will look out for your success.
For over 30 years, our Memphis bankruptcy attorneys have built a stellar reputation for our compassion, experience, and knowledge of the bankruptcy code. That’s how we’ve earned multiple awards for client satisfaction, 5-star ratings across Avvo, and an A+ from the Better Business Bureau.
Our team offers a free appointment to discuss your options. We’ll sit down with you and talk through your hopes and goals. And then we’ll help you figure out whether you qualify and what you need, based on your situation.
To get started with this free appointment, no strings attached, just contact us online today or give us a call at 901-327-2100.
The Power of Chapter 7 Bankruptcy – Get Your Free Copy Today
In addition, we offer a free report about Chapter 7 called The Power of a Chapter 7 Bankruptcy.
In this special resource created by our Chapter 7 attorneys, we guide you through how the process works and what it can do for you.
If you have any questions about Chapter 7 or want to understand whether it might apply to your situation, get your free copy today.