Before starting any type of bankruptcy process, you must make sure you gather all of the facts. Ask as many questions as possible. Consider all of your options. Being informed makes the process go smoothly and helps you avoid mistakes.
To that end, here are a few key facts about Chapter 7 bankruptcy:
- There is a means test. If you have an income, you can earn too much to qualify.
- It stays on your record for 10 years.
- You do not use a repayment plan, but you do pay off at least some of the debt. This is done by liquidating assets.
- Not all assets have to get sold. Many are exempt. You will probably lose property, but don't assume you'll lose everything.
- You do have to go to credit counseling. Refusal to go means the bankruptcy petition will get denied.
- As the above shows, bankruptcy can get denied. Do not assume it will go through just because you want to use it.
- Some debts cannot get discharged. For instance, maybe you owe child support. Bankruptcy can't eliminate it.
- There are other options. Chapter 13, which does use a repayment plan, is a popular one.
- You have to fully disclose everything in bankruptcy, such as assets, debts, income and the like.
- Bankruptcy is typically going to generate an automatic stay on other financial court cases. For instance, it can pause a foreclosure until the bankruptcy case finishes.
This is not all you need to know about bankruptcy, but it can help you get started. Make sure that you take the time to look into exactly what steps you'll need to take.