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What Is a Chapter 7 Bankruptcy and What to Know About It?

April 13, 2021

If you can’t pay your debts, filing for Chapter 7 bankruptcy may be the best option for you. Simply put, in Chapter 7, you just walk away from your debt by selling what you own and the proceeds go towards paying the creditors. Under Chapter 7, your debts would be discharged. In the other types of bankruptcy, you have to reorganize your assets in order to pay everything off.

However, to qualify for a Chapter 7, you have to meet certain criteria based on income and assets. To determine what your circumstances are, it’s important that you contact your attorney to go over the exemptions and your income limits to determine if you qualify for a Chapter 7.

After you obtain an attorney, they will have you begin to fill out the United States Government Official Bankruptcy Forms that require you to provide the following information in order to begin the filing process. You will need to make a list of all of your debts. This includes what they are for, who they are to be paid to and the amount you owe. Then you will need to create an explanation of your income. What is your source of income? How often do you get paid? What is your salary? Another important component here is a list of all of your living expenses for each month, including housing, food, taxes and transportation. All of your assets including any real estate and possessions also need to be accounted for. You’ll have to know the value of your assets and the amount of debt that is attached to any of these possessions.

The whole process from start to finish should really only take between three and six months. However, after you file for Chapter 7 bankruptcy, you can’t file for it again for another six to eight years after your initial filing date. If you are considering filing for Chapter 7 bankruptcy, seek legal counsel with an attorney to begin the process.

Juan C. Velasco, Esq. is a trusted attorney who has been serving the New Jersey area for over 25 years. If you are in need of experienced legal counsel, please contact Velasco Law Office and we will be happy to assist you.