Navigating Chapter 7 bankruptcy can be daunting, especially with the misinformation that circulates. If you wonder whether bankruptcy is the right choice for your situation, there are some things that you should know.
Understand the truth behind common myths as you consider filing for bankruptcy.
Do you lose everything when you file for bankruptcy?
One common misconception is that filing for Chapter 7 bankruptcy costs you all of your assets. The truth is that bankruptcy laws provide some exemptions so that you can retain essential possessions, including your home and your car. Most Chapter 7 filers can safeguard some of their property.
Does everyone qualify for Chapter 7 bankruptcy?
You might think that qualifying for Chapter 7 bankruptcy is as easy as filing the paperwork. The truth is that you must pass a means test that evaluates your income and financial situation. This determines if you can afford your repayments.
Can you choose which debts you include?
You might think that you can pick and choose which debts you include in your Chapter 7 filing. There are specific rules and regulations governing the bankruptcy process and not all debts apply. Child support, alimony and certain taxes, for example, are ineligible. However, you cannot show favoritism toward any specific creditors in the process.
Will everyone know about your bankruptcy?
Some people hesitate to file for Chapter 7 bankruptcy because it becomes a public record. While that information is publicly accessible, the chances of anyone seeking out the records are slim.
There were 225,455 Chapter 7 bankruptcy filings in 2022. Although the bankruptcy process may have its challenges, you need to understand the facts before you decide to file or not. The more you know, the easier it is to tell how bankruptcy can help you.