Bankruptcy isn’t for everyone, although it can be a chance to start over financially. If you are wondering when Chapter 7 bankruptcy is appropriate, the following guidelines can help, although consulting an experienced Chapter 7 bankruptcy lawyer in Terre Haute is also recommended. An attorney can discuss your situation with you and help you decide whether bankruptcy is your best option or another solution, such as debt consolidation, can help you. A bankruptcy on your record makes it difficult to be approved for a mortgage or car loan, and it will affect your credit for the next few years. It’s on public record, too, if you file for bankruptcy, although in reality, nobody is likely to find out about it.
Filing for Chapter 7 may be appropriate for you if your debts make up over half of your income and you have almost no disposable income after taking care of debts and paying the bills. And if it would take you five years or more to pay off all your debt, and the debt you have affects other aspects of your life, such as relationships or work, then filing Chapter 7 may be your best solution. There are also income requirements to determine eligibility; if you make more than a certain amount, you may have to file Chapter 13 instead. All of this is known as the means test; the system was introduced in 2005 to prevent the wealthy from declaring themselves bankrupt without losing their assets. You should also know that if you have filed for Chapter 7 bankruptcy in the last six years, you won’t be eligible and will have to consider other options.
If you have a lot of unsecured debt, then Chapter 7 may be appropriate for you. Many people struggling with too much debt can’t realistically see and end in sight to their situation, and in some cases, although bankruptcy can damage your credit, it can be preferable to a constant stream of late or missed payments, accounts in collection and charged off accounts. Once the process is complete, your unsecured debts will be wiped out, and you won’t be responsible for paying them back. This means that you will no longer be liable for any medical bills, credit card bills, store cards, and other miscellaneous loans. It also means that your creditors will be ordered to stop requesting payments from you, either in writing or by calling you.