Chapter 7 bankruptcy refers to a specific type of personal bankruptcy. A type of bankruptcy where your debts are discharged, and you are given a fresh start. This bankruptcy is not for everybody, and you may not qualify for one. Your annual income will need to be below the median income for your state. But the following are a few signs that you are heading in that direction of a Chapter 7 bankruptcy.
You can't meet all of your monthly expenses
You need to add up all of your monthly expenses and all of your debt payments for a typical month, and then subtract this number from your income. If this number is negative, you may be ready for bankruptcy. However, if there are any expenses you can eliminate, then you need to cut back, and give yourself a chance to pay back your debt. A bankruptcy judge will be looking at your expenses when you file, so it is better to look at them yourself first, and you should be honest about which expenses are truly necessities.
You have few assets
Of course, if you own certain assets that can be sold to satisfy some of your debts, then you need to sell them. A bankruptcy judge will demand this. Creditors have a right to be paid. Chapter 7 bankruptcy laws exist to give people a chance at a new start with their finances, but they are still expected to pay the debt they are able to pay. It should be noted that there are several assets that are exempt from a Chapter 7 bankruptcy. Examples include your home, car and retirement accounts. But there are limitations and rules regarding these assets. Make sure you speak to an attorney before you begin selling assets that you may not be required to sell.
Much of your debt is in collections
Most of your debt is unsecured, but some of it has gone to collections, and you are being hounded day and night by bill collectors. This situation is not going to get better, and bankruptcy may be your only way out. However, if your debt is a college loan or you've gotten behind on child support payments, then bankruptcy will not help because these debts are not covered by a Chapter 7 filing. People with a lot of unsecured debt, such as credit cards, benefit the most.
If the information above fits your financial situation, you may be ready for a Chapter 7 bankruptcy. Make sure that you consult with an attorney about your specific situation. Bankruptcy attorneys can arrange payments, so you can afford their services, and many of them offer a free initial consultation.