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Chapter 7 Bankruptcy: Discharge Debt and Keep Your Property
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Did you know that you may be able to wipe out all of your credit bills, medical bills and judgments in a chapter 7 bankruptcy case and keep all of your property? Does this sound too good to be true? It is not. In fact, it was so good that many people believe that the credit card companies lobbied congress to change the bankruptcy laws so that people would not be able to wipe out their credit card bills. So congress enacted some legal changes to make it more difficult to eliminate credit card debt. However, it is still possible to eliminate all of your credit card debt and start over fresh. Can you imagine never having to pay any amount of your past credit card balance?
So many people sit down and look at their credit card balances and think "how am I ever going to be able to pay off these huge balances on my credit bills?" Well, if only they knew that it is possible with a chapter 7 bankruptcy.
Chapter 7 vs. Chapter 13 Bankruptcy
There are different types of bankruptcies, but generally, the two most popular bankruptcies for an individual are chapter 7 and chapter 13. A chapter 7 bankruptcy petition makes it possible to allow a person to wipe out all of their bills. Of course, a person still will have to pay for things that he wishes to remain in his possession like a car or a house. But if you do not want the house or the car then you can just surrender it and the debt will be removed as well.
Chapter 7 Income Requirements
Now, someone can only eliminate their credit card debt in a chapter 7 bankruptcy if their income is below a certain level. This level varies from state to state and is based on an median income level. Generally, if someone’s income level is less than $40,000 he or she can file a chapter 7 bankruptcy and wipe out their credit card balances, wipe out passed apartment leases, wipe out all of their medical bills, wipe out judgments and possibly clear up their driver’s license. The median income level changes depending on the income averages of the state. The court takes into account dependents and if a person has children than the income level can be higher than $40,000 and that person can still file a chapter 7 bankruptcy petition.
Debt Restructuring with Chapter 13
The second most common type of bankruptcy is a chapter 13 bankruptcy. This bankruptcy is usually done by people whose income level is higher than the average median of that state. In Illinois, the average median is about $40,000. Therefore, if someone makes more than $40,000 and does not have children he or she will usually have to file a chapter 13 bankruptcy and thus, he or she will have to pay back their debt over time. This chapter 13 bankruptcy petition is more like a debt consolidation.
Obtain a Credit Report for a Complete Set of Debt
Now when someone is considering filing a bankruptcy they should first get a credit report to make sure that all of their bills are including in the petition. This way every single bill that a person owes can be wiped out or eliminated forever. Typically, if a person applies for some type of credit and is turned down, they will be granted a FREE credit report. So a person who is thinking of filing for a bankruptcy should remember that he or she may be entitled to this important credit report for free.
A Credit Counseling Course is Required by Law
In order for people to stay out of debt for the rest of their lives, the law requires that individuals take two financial classes. These classes will help an individual from falling into debt again. The bankruptcy process is designed to ensure that individuals shall be debt-free after the bankruptcy. Therefore, the bankruptcy law attempts to help people avoid having debt in their future.
Imagine wiping out all of your present debt and never having debt again. It is possible with a chapter 7 bankruptcy.
Also a chapter 7 bankruptcy allows a person to keep all of their possessions if their possessions fall within the guidelines allowed. Therefore, it is possible that a person can wipe out all of their bills , keep everything they own and never have debt again.