Don’t let rumors discourage you from filing Chapter 7 bankruptcy

Many people do not consider Chapter 7 because of unpleasant rumors they have heard.

If you are one of the many Americans struggling to make financial ends meet, you may have heard about the relief that Chapter 7 can provide. However, you may have stopped short of taking advantage of it, because you have also heard some undesirable things about filing this type of bankruptcy. In truth, Chapter 7 can offer significant relief of your debts with a minimum of drawbacks in most cases.

I will have to sell my property

One of the most pernicious rumors about Chapter 7 is that all filers must sell all their property in order to qualify for relief. However, in reality, most filers do not lose any property during the process. Although Chapter 7 does involve a liquidation sale, the only property that is sold is nonexempt assets, including second homes and luxury items. Most of your important property, such as your house, car, retirement assets and personal belongings are exempt from the sale by Florida or federal law. As a result, most filers do not have to sell anything of consequence, as few own nonexempt assets.

After any nonexempt property is sold, most of your unsecured debt (e.g. credit cards and medical bills) is discharged. This takes place in as few as three months after you file.

Bankruptcy will ruin my credit

Another reason many people are discouraged from filing bankruptcy is a fear of ruining their credit. Although bankruptcy causes your credit score to decrease, its effect is often exaggerated. In reality, bankruptcy’s negative effect is only temporary. Also, credit card issuers and lenders are willing to work with you soon after your bankruptcy is completed. If you demonstrate financial responsibility, your credit score can return to pre-bankruptcy levels in as few as one or two years. Unfortunately, many people use bankruptcy’s temporary effect on their credit scores as an excuse to do nothing, which can hurt their scores more than filing bankruptcy would.

Chapter 7 is difficult to qualify for

You may also have shied away from Chapter 7 bankruptcy because you have heard that Congress made it harder for most people to qualify for its relief. It is true that you must first pass the means test to qualify for bankruptcy, but the difficulty in doing so is generally not an issue for most.

During the means test, your income is examined. If your income is below the median for a Florida household of similar size, you automatically qualify for Chapter 7. If your income exceeds the median, you may still qualify. In such a case, the court looks at your disposable income-what is left over after paying necessary living expenses. If your disposable income exceeds a certain amount, you may not qualify for Chapter 7, but would likely qualify for Chapter 13, which can also provide significant debt relief. However, most persons considering Chapter 7 have no problem passing the test.

An lawyer can help

If you are at your wit’s end financially, don’t let rumors dissuade you from learning the truth about what bankruptcy can do for you. The bankruptcy lawyers at Nowack & Olson, PLLC can review your options with you and recommend the best way to rid yourself of your burdensome debt load.

Abstract: Many people do not consider Chapter 7 because of unpleasant rumors they have heard.

Snippet: *Debunking the Chapter 7 myths*

Many people do not get the financial help that they need in Chapter 7 bankruptcy because of rumors and half-truths. Read this article to learn the truth behind these rumors.