Bankruptcy is a situation wherein a person or a company is not capable of fulfilling its monthly payments of the debts because of financial issues. It will offer the person or the company a fresh start in terms of financial factors. Once you file for bankruptcy, the people or the companies that you own money to will lose their right to collect their debt from you till alternative means are found.
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Chapter 7 Bankruptcy
Bankruptcy is of many kinds and the right one is chosen based on the requirement of a person that is planning to file it. Chapter 7 is one such type. Here, the person filing it is allowed to discharge all their unsecured debts as well as the secured debts, if any kinds of collateral are available in this case.
Not everyone can file for a Chapter 7 bankruptcy and the people that are eligible to choose this option are finalized based on the results of the “means test”. This test is conducted based on the income of a person and their necessity of filing for bankruptcy. If the test proves that the person earns enough for their living, then they are not eligible for a Chapter 7 bankruptcy claim.
How to file for Chapter 7 Bankruptcy
Here are some of the factors that you should understand before filing for Chapter 7 bankruptcy.
Listing of all the Debts
For filing Chapter 7 bankruptcy, you should first list all the debts that you have yet to repay such as credit card bills, student loans, medical bills, fines, tickets, taxes, and other such payments due.
Retaining some property
Chapter 7 Bankruptcy law states that you can retain some of your property that has equity. If you have some mortgage payment due on your home, then you need not worry about listing it while filing for bankruptcy.
Once you file for bankruptcy, everything that can become the black mark in your financial history will be reset to zero. You can start rebuilding your credit score and other aspects from then on and can restart your life from zero.