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The Benefits of Chapter 7 Bankruptcy

Total Discharge of Debts

One of the many benefits of bankruptcy is the defense it provides against creditor abuse and other actions taken by bill collectors to enforce payment of a debt. In the case of Chapter 7, once your petition for bankruptcy is filed, the court will issue what is known as an "automatic stay." This order puts a halt to any attempts by creditors to collect on monies you owe. Filing can be a method of foreclosure prevention, so that you can keep the family home and it also can stop or prevent wage garnishment, repossessions and debt lawsuits.

Chapter 7 bankruptcy is intended to give you a new financial beginning by discharging all of your eligible debts. Some debts, such as student loans or child and spousal support payments are not exempt. In the main, however, your debts will be forgiven and this is why Chapter 7 is commonly referred to as "fresh start" bankruptcy.

The process begins with answering the question, "Do I qualify for bankruptcy?" This is done by using a "means test" to determine the state of your finances and allows a knowledgeable attorney from Price Law Group to show the court that you are, in fact, eligible. They have over 20 years of experience in helping people who face dire financial situations and have helped more than 100,000 individuals with such problems. If you are not eligible for Chapter 7, there are other solutions such as loan modification, short sale negotiation and debt settlement that may be right for you.

Avoid Being Accused of Abuse

Courts are extremely strict when it comes to filing for Chapter 7 bankruptcy. Although the debtor gets a clean slate, those to whom money was due will likely suffer some losses. One reason why abuse may be assumed is if the debtor's monthly income over the last five years is more than $11,725 or if 25 percent of the debtor's debt is at least $7,025. Basically what this means is that if a court sees that your income is sustainable while your debts are still increasing, they may be led to believe that your debt was avoidable and deny you Chapter 7. They may tell you that a Chapter 13 restructuring would be more appropriate, according to 11 U.S. C. Section 707. A debtor will then have the responsibility to prove to the court that the spending was necessary because of special circumstances.

Finding Relief with Chapter 7

Once your petition for Chapter 7 has been approved by the court, you will be free of your unsecured consumer debt. Many personal items including your home and vehicles will normally be exempt from sale and this is one of the ways that Chapter 7 acts to defend you from creditors. When bankruptcy is completed, you will be relieved of your legal obligation in most debts.

Filing for bankruptcy can be a difficult decision to make. Attorneys at the firm can help you to make a wise choice, based on facts, which can help protect you from the problems connected with overwhelming debt.

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