People caught in overwhelming debts are usually stressed in trying to figure out what can save them from their debts or what they can do to save themselves. To many, the thought of having to sell everything they have painstakingly worked for is just too painful – but what else is there left to do?
Well, the truth is, there is a legal way which will help individuals with overwhelming debts regain control of their financial situation: bankruptcy.
Bankruptcy is a legal proceeding where individuals or businesses that owe debts can declare their inability to pay what they owe; in this proceeding, creditors are also ordered to forgive debtors their debts. Declaring and filing bankruptcy is allowed under the U.S. Bankruptcy Code. There are different chapters under this Code, each designed to address an individual’s or a firm’s specific financial situation. Besides helping debtors regain control of their financial situation, filing bankruptcy has many other benefits, the most immediate of which (depending on the bankruptcy chapter filed) is the automatic stay, which is cessation of whatever form of harassment (such as e-mails, phone calls, letters, text messages, lawsuits and others) law firms and debt collectors use in order to force debtors to make payments.
Chapter 7 bankruptcy, which is also called liquidation bankruptcy, is one specific chapter that can help individuals. This chapter is actually best for people who have properties, but whose salary or income does not go above the stipulated limit in the chapter. As the name suggests, this chapter requires the liquidation of a few of a debtor’s (non-exempt) properties . The selling (of the surrendered properties) is to be done by a court-appointed trustee, who will also distribute the amount earned to creditors. Debts to be paid are only those categorized as non-dischargeable, such as court fines, alimony and student loans. Medical bills, business and personal loans, debts due to use of credit cards are called dischargeable debts, meaning, the court may free a debtor from the obligation of still paying these.
According to a Raleigh Chapter 7 bankruptcy attorney, Chapter 7 is one of the most commonly sought forms of bankruptcy because it provides individuals with a way to discharge, or completely eliminate, many of their existing debts. For a person suffering under the weight of unmanageable debt, Chapter 7 bankruptcy may be able to provide him/her with much-needed relief. However, pursuing this debt relief option can be complicated, so it is important that he/she seek professional assistance if he/she thinks that Chapter 7 is right for him/her.
Debtors who wish to seek protection under this chapter will have to take a means test, which they will need to pass. This means test is a way to determine if their income is low enough to qualify them for this bankruptcy chapter.Learn More