Chapter 7 Bankruptcy is a Good Option

 When you are facing financial hardships that make it impossible to pay your monthly bills, it is not uncommon to feel that you need to bury your head as if you were hiding in a bunker.  Process servers may be staking out your home so that they can serve you with a debt collection lawsuit as soon as you walk out the door.  Even as you are safely barricaded inside your home, the act of answering the phone may mean verbal abuse from a rude debt collection agent.  The situation usually gets worse the longer you avoid confronting your financial problems, but a Chapter 7 bankruptcy can provide immediate relief.

A Chapter 7 bankruptcy (also called “Liquidation Bankruptcy”) essentially allows you to permanently avoid most unsecured financial debts.  Although not everyone qualifies for a Chapter 7 bankruptcy discharge, those that do qualify can reduce their financial obligations so that they can pay their mortgage or rent, buy groceries, cover medical invoices and afford other critical monthly expenses.  When you file for debt relief under Chapter 7, you may extinguish your legal obligation to pay a wide range of unsecured debts that include:

• Balances on credit cards
• Most judgments from lawsuits
• Unpaid hospital bills and other outstanding health care debts
• Lines of credit that are not secured by collateral
• Department store charge accounts
• Personal loans (not subject to a security interest)
• Existing balances on utility accounts
• Some tax obligations under specific circumstances

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When  you are struggling with their financial obligations by ignoring the problem, creditors may use harsh debt enforcement tools like levying against your bank accounts, filing liens with the county recorder against your real property, initiating foreclosure on your mortgage or garnishing your paycheck.  These kinds of aggressive debt collection practices may further tie up your available cash each month so that your financial hardships are made worse.   Once a Chapter 7 bankruptcy has been filed, debtors receive immediate relief in the form of the automatic stay.  The automatic stay basically is an injunction against  most unsecured debt collection and enforcement activities that allows a debtor filing for bankruptcy protection time to navigate through the bankruptcy process.  When you file Chapter 7, the harassing telephone calls, threatening letters, lawsuits, wage garnishments and other debt collection actions and tools will stop.  However, there are a few types of unsecured financial obligation that will not be impacted by bankruptcy, which include:

• Family court type debts, such as child support and spousal maintenance (i.e. alimony)
• Court imposed fines and penalties
• Student loans (except for very limited circumstances)
• Damages arising out of a personal injury case involving drunken driving
• Many tax obligations

While this is not an exhaustive list of the types of unsecured debts that are not dischargeable in bankruptcy, the point is that you can obtain much  needed relief from most forms of unsecured financial obligations.  Once you have completed your Chapter 7 bankruptcy, you will receive a bankruptcy discharge so that the debts that are subject to bankruptcy can no longer be enforced against you.   Given how much people have to gain by filing Chapter 7, they may find it advisable to fight to regain control of their financial lives in bankruptcy rather than hunker down and hide from  debt collectors.  While not everyone will qualify for Chapter 7 under the financial means test, we offer a free consultation so that we can evaluate your situation and advise you about whether you qualify.  Call us today at Ayo and Iken to schedule your confidential free consultation at 1-800-469-3486 or email us.