Filing bankruptcy is often considered a last resort. This is because filing Chapter 7 (Ch. 7) or Chapter 13 (Ch. 13) has a negative stigma and far-reaching impact. Filing Ch. 7 will impact your personal credit history for the next ten years. Debt also affects your life and relationships. If you need assistance with debt, consult with bankruptcy attorney Las Vegas NV to review your options.
Reviewing the Pros and Cons with a Chapter 7 Attorney Las Vegas
The primary benefit of filing bankruptcy is that most consumer debt will be removed from your credit history. This occurs when you complete the bankruptcy process and the court grants you a discharge.
One negative aspect of filing Ch. 7 or 13 is that your credit history will note the bankruptcy in your credit file for the next ten years. So for the next ten years, your bankruptcy may impact your personal finances in a number of far-reaching ways:
- Make it more difficult to obtain credit cards
- Qualify for an apartment or home mortgage
- Penalizing you with less favorable loan terms in the event you are offered a new loan.
Perhaps more damaging to your future finances is that filing Chapter 7 may impact your ability to employment . Examples may include certain government or financial and casino positions. That being said, Chapter 7 is a valuable tool for those individuals that cannot afford to repay their debts. Those individuals that adhere to the bankruptcy rules will receive a discharge. Meaning that they will not have to pay back most consumer debt obligations.
Filing Bankruptcy May Limit Your Employment Prospects
If you are being harassed by creditors, then you may be tempted to file bankruptcy soon. Before you do, however, be sure to consider the consequences and understand the pros, and cons. Chapter 7 is what most people think of when they think of traditional bankruptcy.
Filing Chapter 7 does generally require you to qualify financially, although there are certain exceptions. In order to qualify for Chapter 7, your income generally must not exceed your state’s median income for a household of your size. The bankruptcy court will look at your income and number of dependents. Generally, if your income and household size fall under your state median, you qualify for Chapter 7. This is referred to as the Chapter 7 Means Test with state median income data available here.
Chapter 7 vs. Chapter 13 Bankruptcy | Bankruptcy Lawyers Las Vegas Nevada
For those individuals that do not qualify for Ch. 7 because they make too much money, Ch. 13 may be a viable option. Ch. 13 may allow you to keep assets, even if you are delinquent, if you have regular income and can adhere to the repayment plan.
Ch. 13 is a court-approved repayment plan that allows you to use your future income to pay off your debts. The Ch. 13 plan allows you to keep your exempt property rather than losing it to creditors. Once you have made all your required plan payments, you will receive a court-ordered discharge of your debts.
Other factors to think about: Congress made sweeping changes to the bankruptcy laws back in 2005. The effect of those changes is to force most consumers into filing bankruptcy under Ch.13 rather than Ch. 7. Ch. 13 allows you to keep certain assets like real estate even if you have become delinquent on your payments.
In Ch. 13, a repayment plan that permits you to use your future income to pay off your debts over 3-5 years. After you have made all the payments under the plan, you receive a discharge of your debts.
State or Federal Bankruptcy Exemptions May Help You Protect Your Financial Assets
Ch. 7, called straight bankruptcy, involves the sale of all of your assets that do not qualify for an exemption. Exempt property may include cars, work-related tools, and basic household furnishings and will depend on your state. Property that does not qualify for exemption may be sold by a court-appointed official or turned over to your creditors.
The 2005 changes to the Bankruptcy Code also imposed restrictions on how often an individual can file Ch. 7. An individual now must wait eight years after receiving a discharge before they are eligible for filing Ch. 7 again. The Ch.13 waiting period is far shorter and might be as little as two years between filings.
Ch. 7 and Ch. 13 share some common characteristics. Both forms of bankruptcy eliminate unsecured debts and stop foreclosures, repossessions, garnishments and utility shut-offs, and debt collection activities. Both also provide exemptions that allow you to retain certain assets, although exemption amounts vary by state. Personal bankruptcy typically does not erase support payment, alimony, fines, taxes, and student loan obligations.
Filing bankruptcy under Ch. 7 or Ch. 13 will both require you to obtain bankruptcy eduction. This includes bankruptcy counseling and financial management education in order to be eligible for a discharge.