Chapter 7 Bankruptcy
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Chapter 7 Bankruptcy for Overwhelming Debt
Chapter 7 protects you from being unduly harassed by creditors. By filing for Chapter 7, you can eliminate your legal obligation to pay certain over-burdensome debts such as credit cards, unsecured loans, medical expenses, and, in some cases, business debt. Moreover, Chapter 7 bankruptcy does not require any debt minimum for eligibility.
However, debt categories such as child support, criminal obligations, parking tickets, most taxes, car loans, mortgages, and, in most instances, student loans cannot be discharged through Chapter 7 bankruptcy.
To see if all your property can be protected from confiscation by Chapter 7, you are required to disclose all your assets. You are permitted to retain basic household items, pensions, hobby equipment, retirement accounts, and most life insurance policies.
To be considered eligible for a Chapter 7, you first must pass the means test, which calculates your gross monthly income based on an average of the past six months plus all other income from every member of your immediate household.
Note that in some cases, debtors who pass the means test may still not qualify for Chapter 7 protection because their income and monthly expenses may not permit it.
Even if you do not pass the means test or are ineligible for Chapter 7 for other reasons, you may still be able to seek debt relief under Chapter 13 bankruptcy law.
Bankruptcy has a lot of negative connotations. However, it is not uncommon for people to find themselves in insurmountable debt through no fault of their own. Chapter 7 bankruptcy can resolve these debt problems and protect individuals and families from overbearing financial strain and oppressive debt collection methods.
Benefits of Filing for Chapter 7 Bankruptcy
- All actions by your creditors must cease
- Wage garnishments must stop, and bank attachments must be released (no money can be taken from your bank account except by you)
- Harassing phone calls and threatening mailings from creditors end
- Your unsecured dischargeable debt, such as credit cards, medical bills, and unsecured loans, will be wiped out
- If the utilities in your home have been shut down, they must be turned on again
- You will be able to keep your motor vehicle(s) and other secured property if you keep up your payments
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After Bankruptcy, Then What?
More people than you might expect have been through the bankruptcy process, and while it can be taxing, there is life afterward. According to Rhode Island law, certain properties are exempt from repossession if you have filed for Chapter 7 bankruptcy. These include your household possessions, your jewelry and other personal items, the equity in your home up to $500,000, and your car if you keep up monthly payments.
If you are having trouble with paying your bills and are under stress from nagging collectors and creditors, act now. With swift action, you have a better chance of rectifying your situation and returning to a normal life. Take action today.
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