What is Chapter 7 Bankruptcy?

What is Chapter 7 Bankruptcy?

Are you considering filing for bankruptcy? I was speaking with a local Chandler Arizona bankruptcy lawyer about people’s options and he pointed out that one of the most common ways for people to file bankruptcy was for them to file what is called Chapter 7 bankruptcy. Chapter 7 Bankruptcy is a legal way for an individual to get relief from debt. The Bankruptcy laws are Federal and the Chapter 7 refers to an actual Chapter 7 in the Federal code. Both the debtor and creditors meet with a Federal judge in a Federal court.

  • Who?
  • Equity Size
  • Get A Lawyer

Who?

Chapter 7 bankruptcy is designed for the individual who has few assets. The goal of the Chapter 7 bankruptcy lawyer is to help the client keep as much property as possible so they can get a fresh start and still have some assets to help them.

Amount of Equity

If there is little equity in your home, you may be able to keep it, especially if you are still current on your mortgage payments. If you are not current, the mortgage company can insist they get the house back. For example, if you are current on the mortgage and the current market value on your house is $150,000 and you owe $145,000 you will probably be able to keep it. If there is significant equity, say your house is valued at $150,000 and you owe $70,000 there is significant equity and the court can seize these assets to sell your house and pay off creditors. You will be given some of that money to start over but most will be taken by the Trustee and to be given to your creditors. If you owe more on your car then it is currently valued, and you want to keep it, the process can also eliminate some of that debt and again, you have a better chance of negotiating if you are current on your payments. The dealership will most likely insist you pay them in full in cash for what the car is valued for, though. Or, you can also give the car back to the dealership and be free of the debt.

Get A Lawyer

With the help of your Chapter 7 bankruptcy lawyer, an individual asks the court to wipe out most or all of their debt and most of their excess assets are relinquished to the Trustee who sells them to pay off the creditors. Since the Trustee gets paid out of the proceeds of the sale, often there is nothing left for the creditors.
Chapter 7 bankruptcies can not eliminate child support or alimony debt or money owed to the Federal government for taxes or take away your obligation to pay for a court ordered penalty. If you live in Arizona, be sure to find the right Arizona bankruptcy attorney – and if you live in Nebraska, be sure to find the right nebraska bankruptcy lawyer – each state is different!

Be Prepared

Bankruptcy is never an enjoyable experience and it is usually filled with emotions. Be sure to follow these tips and make sure that you are prepared!

Fake Coup, One Way to Solve the US Debt

From The Onion:

A fake coup to solve our national debt consolidation problems??? Pretty funny. Or is it?

Credit Card Bill of Rights

Both the US House and the US Senate passed a bill to restrict credit card practices and eliminate sudden increases in interest rates and late fees.  Here are some of the major provisions of the bill and how it will affect you (via boston.com):

  • Creditors cannot increase the annual percentage rate (APR) during the first 12 months of opening up an account.
  • Creditors are required to provide consumers with a 45-day advance notice of changes in rates and significant contract changes. Rates that change due to a change in the index that the rate is based on are excluded from this 45-day notice requirement.
  • Promotional rates need to be in effect for at least six months from the beginning date of that promotion.
  • Creditors need to provide a 30-day advance notice of an account closure.
  • With certain exceptions, credit card issuers are prohibited from charging a finance charge based on the double billing cycle method.
  • Creditors are prohibited from charging a fee on an outstanding credit card balance at the end of the billing period if the fee is attributed to the interest accrued on an outstanding balance that was fully repaid during that preceding billing period.

Read the full summary of provisions.

As of this blog post the President had not signed it but he has promised he will.

This site is for informational purposes only. It is not sponsored or in any way affiliated with the government. If you are in need of a mortgage loan, consult with a licensed mortgage professional. All fair housing and equal housing opportunity laws apply when applying for a mortgage or buying a home. Copyright 2012.