The COVID-19 pandemic and related economic disruptions have put a serious financial strain on many families. If you are dealing with serious financial issues, you may be considering filing for Chapter 7 bankruptcy protection. Before you file, it is crucial that you know the implications of declaring bankruptcy. In this article, our Martinsburg Chapter 7 bankruptcy attorney explains what Chapter 7 bankruptcy means for the people who declare it.
Chapter 7 Bankruptcy is a ‘Straight’ Bankruptcy
You will often hear Chapter 7 referred to as either a ‘straight’ bankruptcy or a ‘liquidation’ bankruptcy. As explained by the United States Bankruptcy Court for the Southern District of West Virginia, Chapter 7 has two key purposes:
1. Give honest consumers a chance to get a fresh start; and
2. Discharge debts in an orderly manner so that creditors are treated fairly.
Many Debts Can Be Discharged in Chapter 7
With Chapter 7 bankruptcy, most consumer debts can be discharged outright. In fact, through a successful Chapter 7 bankruptcy petition, an insolvent consumer can wipe out many debts, including credit cards, medical debt, and secured student loans. If you have a lot of debt that you simply cannot pay, Chapter 7 may be your best opportunity for a true fresh start.
Chapter 7 Provides Important Property Protection
Many people who are considering filing for Chapter 7 bankruptcy protection are worried about losing their entire life savings, including their home and their vehicle. There is good news: Federal bankruptcy law allows Chapter 7 petitioners to exempt property. How much can be exempt depends on many different factors. That being said, a lot of people who file for Chapter 7 bankruptcy are in a position to keep most (or all) of their personal property, including some savings, incoming wages, and personal vehicles.
A Bankruptcy Filing Will Harm Your Credit—But Could Be Good for It in the Long Run
Finally, it is important to think about the effect that a Chapter 7 bankruptcy filing will have on your credit. Under federal regulations, a Chapter 7 bankruptcy will stay on your credit report for ten years. In the short term, a bankruptcy filing will cause some harm to your credit rating. As you likely recognize, consumer bankruptcy is considered “negative information” on a credit report.
That being said, in many cases, a bankruptcy filing is actually good for your long-term credit. The reason is that you can discharge bad debts and actually get yourself back into a financially stable position. At Hinkle Law, PLLC, our bankruptcy and debt relief team is focused on helping our clients find true long-term solutions. We will work with you to help you repair your credit rating.
Schedule a Free Consultation With Our Chapter 7 Bankruptcy Lawyer
At Hinkle Law, PLLC, our West Virginia bankruptcy law attorney is a solutions-driven advocate for people dealing with financial distress. If you have any questions about the implications of declaring Chapter 7 bankruptcy, we are here to help. Contact us now for a no-cost, no-obligation review of your case. With law offices in Martinsburg, Charleston, and Hagerstown, MD, we provide bankruptcy law and debt relief services to consumers throughout the surrounding region.