The Advantages of Chapter 7
In a Chapter 7 bankruptcy, most or all of your consumer debt, such as credit cards, payday loans, unsecured personal loans and medical bills can be eliminated while you keep your possessions (that are exempt). Even some older tax debt may be eliminated. Secured loans such as mortgages and vehicle payments may also be eliminated if you are willing to surrender those assets. On the other hand, you may be able to retain houses and vehicles if you are current on payments and agree to continue making the payments (and you don't have excess equity in those assets). Filing Chapter 7 will immediately stop all collection activity, such as foreclosure proceedings, wage garnishment, vehicle repossession, harassing creditor calls and creditor collection actions against you. The Chapter 7 process takes approximately 90 days from filing date to discharge.
What Chapter 7 Cannot Accomplish
Certain debts cannot be eliminated in a Chapter 7 proceeding, such as many student loans, newer tax debt and child support or alimony. Chapter 7 bankruptcy also cannot "save" your house from foreclosure or restructure your mortgage.
Do You Qualify for Chapter 7?
In October 2005, Congress passed new laws pertaining to bankruptcy which require individuals and families filing for bankruptcy to pass an income "means" test, to qualify for Chapter 7.
What If Creditor Continue to Harass Me?
Once your bankruptcy is filed with the court, all collection activities, including repossessions, foreclosures, phone calls, letters and lawsuits, must stop immediately through what is called an "automatic stay". Any collection activities that occur after your bankruptcy is filed could be illegal, and we may be able to bring legal action against the creditor(s) responsible if they continue to harass you.
Why would I file a Chapter 13?
HOW LONG BEFORE I CAN FILE BANKRUPTCY AGAIN?
Ch. 7 to Ch. 7
If you filed a Chapter 7 and received a discharge, you must wait 8 years from the filing date of the earlier Chapter 7 case to the filing date of the newer Chapter 7 case (otherwise you won't be eligible to receive a discharge in the newer case).
Ch. 7 to Ch. 13
If you filed a Chapter 7 and received a discharge, you must wait 4 years from the filing date of the Chapter 7 case to file a Chapter 13 case (to be eligible for a discharge in the Chapter 13 case).
Ch. 13 to Ch. 7
If you filed a Chapter 13 and received a discharge, you generally have to wait 6 years from the filing date of the Chapter 13 case to file a Chapter 7 case (to be eligible for a discharge in the Chapter 7 case). There is an exception, however, to the six year time limit if you paid a certain percentage of your unsecured creditors in your Chapter 13 case.