In what Situation is Chapter 7 the best Bankruptcy choice
Chapter 7 Bankruptcy is considered the best last-ditch choice for consumers who are experiencing financial difficulties. Bankruptcy offers a fresh start and the possibility of liquidating debt. It’s important to understand the trade-off, though. Even though it offers a clean slate, a bankruptcy involves costs both in terms of the cost to file as well as the way it affects your credit score.
There are unique situations where Chapter 7 Bankruptcy might be the best choice in your situation. Debtors may file bankruptcy when they are overextended on credit, when they have overwhelming and unexpected expenses, and/or when they’ve suffered a reduction of income. Chapter 7 Bankruptcy is the most popular option because it’s faster, taking a matter of months instead of years. Chapter 7 Bankruptcy may be a good choice because it allows you accomplish the following.
1. To rebuild credit score
Chapter 7 Bankruptcy offers the possibility of getting out from under the debt, so you can start to rebuild your credit. While your situation will vary, based on your personal history, you can create a budget, pay your bills, and keep up with your student loan and/or other payments. You can also sign up for a secured card, get a co-signer, and look for a loan that will help rebuild your credit.
2. Relief from creditor harassment
Chapter 7 Bankruptcy gets rid of the harassment from creditors, including garnishment, collection calls and solicitations, and other collection tactics. That level of harassment is enough to make some debtors jump at the change to get rid of the embarrassment. It‘s still important to consider all the angles (how the bankruptcy will affect you) before making the choice to file for Chapter 7 Bankruptcy.
3. Huge medical and credit card debt
Chapter 7 Bankruptcy can “fix” those situations that appear to be insurmountable. Huge debts from medical expenses are particularly troublesome, particularly since you may also have a health situation to contend with as well. Credit card debts can also quickly add up in times of emergencies or unexpected situations beyond your control. Then, it’s difficult to pay off the debt.
4. Risk of going through Foreclosure
Chapter 7 Bankruptcy can “save” you from foreclosure, which could mean loss of your property. A Chapter 7 Bankruptcy can give you a reprieve for a little bit, which give you more time to either negotiate a solution or protection from loss. Once you file for bankruptcy, the court places an automatic stay into effect, which prohibits further action. So the creditor typically isn’t able to pursue further action, including foreclosure, at least for a period of time.
While bankruptcy can be a difficult decision for you to make, it can also be the best solution for your personal situation. It could save your home from foreclosure at least temporarily, but it can also help you get that clean slate you may have been dreaming of for months or years. The Chapter 7 Bankruptcy may be a way to start over after you’ve experienced medical or health costs that were beyond your control. It may be a matter of survival. You need the help offered by Chapter 7 Bankruptcy to make it back to a state where you can pay your bills, live, and thrive.
Chapter 7 Bankruptcy is not the best situation for everyone, but in the instances we’ve discussed, it could be the only real solution you have to make it out the other site. It’s your last-ditch effort. You’ve likely exhausted all other efforts, and you’ve discovered that there are no other solutions that will really “save” you. It may be that you just can’t take the garnishments, harassing creditor calls and letters, and the credit card and medical bill debt. Your goal with the Chapter 7 Bankruptcy is to set aside the disasters that are threatening to overwhelm you, and strike out with the one solution that you can see. You can only hope that your filing will offer enough of a reprieve that you can use to rebuild your credit.
What’s Your Next Step?
When you’ve got questions about Chapter 7 Bankruptcy, and you don’t know where to turn, Nathan A. Berneman, APC, is here to answer all your questions, offer recommendations and advice, and also to get you on the track toward your financial wellness and healthy future. It’s not something that happens overnight, which is why we offer a consultation. When you call in, we’ll gather initial details, and then we’ll schedule an appointment for you to come in for a comprehensive review.
Call 805-492-7045 to Schedule Your Appointment Today!