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                               A GUIDE TO CHAPTER 7 BANKRUPTCY  
          Bankruptcy is a legally declared inability of individuals or businesses to discharge their debts. A declared state of bankruptcy can be requested not only by creditors in an effort to get what they are owed but also by the insolvent individual or organization. If it is difficult to repay debts, declaring the bankruptcy may be the right solution to debt problems.
Out of six basic types of under the Bankruptcy Code, Chapter 7 is a “liquidation” of nonexempt assets to pay debts. In a court-supervised procedure, a court appoints a trustee who liquidates the non-exempt assets of the debtor’s estate and makes distributions to creditors. The Bankruptcy Code allows the debtor to keep certain exempt property; but a trustee will liquidate the debtor's remaining assets. 
          According to the amendments to the Bankruptcy Code enacted in to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, if a debtor’s income is in excess of certain thresholds, the debtor may not be eligible for chapter 7 relief. Filing a petition under chapter 7, automatically stays most collection actions against the debtor or the debtor's property, but potential debtors should realize that the filing of a petition under chapter 7 might result in the loss of property.
After Chapter 7 bankruptcy, one will not longer owe money on credit cards, unsecured loans, unpaid hospital, medical and utility bills and unpaid rent. But debts like state and federal taxes (unless they are more than three years old), child support required by law; alimony, government-backed student loans, debts due to fraud, fines, penalties and debts due to willful injury to another person or property are not eliminated by Chapter 7 bankruptcy.
          Just a few months after the petition is filed, in most chapter 7 cases, the individual debtor receives a discharge that releases debtor from personal liability for certain dischargeable debts. Thus, chapter 7 Bankruptcy is designed to give the debtor a new start and a chance to live with sound financial management.
Call Jamaal today to assist with filing Chapter 7 Bankruptcy. (901) 295-4529

Advantages of Bankruptcy

8/21/2019

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​Consumers who are considering filing bankruptcy are faced with a lot of questions and are often not sure what the advantages could be- if any. Besides the obvious advantage of not having the debt that hangs over their head everyday, are their any other advantages of potentially damaging your credit report for 7 to 10 years by filing bankruptcy?

There are many different aspects to consider before making a final decision. There are always options, but choosing the right option is not always easy. Below are some of the advantages that can help the consumer make thought-consuming decisions that are right for them. The advantages are not always the deciding factor but they can sure help you make a wise decision.

 The Automatic Stay 

One advantage is when the consumer files for Chapter 7 or Chapter 13 bankruptcy, a petition is filed and there is  what is called an automatic stay, which requires the creditors by law to cease all activities of collecting the debt. This means that they have to stop calling, leaving messages, or mailing you notices when they are notified of your intentions. Creditors can be penalized by the court system if their efforts continue. This type of situation is best handled by an attorney. Bankruptcy Attorneys are available for a free consultation to answer any and all questions that you may have. They will help you see the advantages that can be offered by Chapter 7 and Chapter 13 bankruptcy. Each type of bankruptcy has it’s own set of advantages and disadvantages.

 A Fresh Start 

The advantage of obtaining a fresh financial start is another major benefit that a consumer should consider when deciding if filing a Chapter 7 is the best choice for them. Chapter 7 bankruptcy is a better option for debtors who have little or no property and mostly unsecured debts. You can choose what debts you wish to file Chapter 7 bankruptcy. This includes both secured and unsecured debts. Unsecured debts are those like medical bills and credit cards. A secured debt is when you have decided to use collateral that can include your home, car, or other major assets you have ownership of. Chapter 7 bankruptcy is also referred to as liquidation. 

 Possible Disadvantages 

Chapter 7 is not a perfect solution, however, as there are some unsecured debts that do not qualify for Chapter 7 bankruptcy- including most school loans.   Please ask questions of your bankruptcy lawyers. Consumers who are eligible for Chapter 7 bankruptcy may be discharged or forgiven from most unsecured debts. With a secured debt the creditor is entitled to collect the debt by seizing and selling certain assets of the debtor if payments are missed.  

 Chapter 13 

Chapter 13 bankruptcy provides a better solution for those consumers who have a regular income, secured debts and do not which to loose their property. Chapter 13 bankruptcy allows the consumer to submit a plan, to the bankruptcy court to repay the debts that are secured in a three to five year period of time.  This means the consumer does not have to lose ownership of the items used to secure the debt. Each individual’s situation is different though, and must be evaluated before deciding which type of bankruptcy is right for their particular situation.

 Learning Opportunities 

When a consumer decides to file for bankruptcy, whether it is Chapter 7 or Chapter 13, the consumer is required to take some classes. The consumer is required to attend classes pertaining to credit counseling and debtor education. This is an advantage that not only helps you figure what had went wrong, but it will also help you find new ways of budgeting, paying bills, and spending your funds so that you do not run into the same financial difficulty in the future. The classes also teach you how to protect yourself against identity theft and also how to read and monitor your credit report.

 Employment After Bankruptcy 

Consumers that are concerned about being dismissed from a job due to the fact that they are filing bankruptcy should not be worried. Another advantage is that employers are not allowed to dismiss an employee based upon the fact that they, the employee, are filing bankruptcy.  Keep in mind, however, that it may affect your ability to obtain new employment for a few years after filing bankruptcy.


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    Jamaal M. Walker is a debt relief attorney licensed to practice in Arkansas, Mississippi, and Tennessee.

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