Know What You Stand To Lose Before Filing For Chapter 7
Before you file for Chapter 7 bankruptcy, it is very important to look at any upcoming payments you are expecting to receive. The reason for this is because the bankruptcy court can seize numerous types of monetary payments that are owed to you, and you could end up forfeiting a lot if you do not know this.
What is Chapter 7?
Chapter 7 bankruptcy is the branch of bankruptcy that allows you to clear away all the unsecured debts you owe, without having to repay them. You can only declare Chapter 7 if you pass the means test, which is based on the income you make and the family members living in your home.
While there are exceptions to what debts can be forgiven, almost all unsecured debts are included. The debts that cannot be included in Chapter 7 include things like child support, court-ordered debts, and student loans.
What happens to debts?
The debts that are forgiven during bankruptcy are usually just wiped away; however, there are times when certain debts are repaid, and this is one thing you should be fully aware of before filing. If you are expecting money in the near future from one of the following, you must let the bankruptcy court know:
- A tax return
- An inheritance
- An insurance policy
- A lawsuit
When you file for Chapter 7, you may be relinquishing the rights to any money you receive from any of these things. You must legally tell the bankruptcy court about this, and the trustee will intercept the funds before you can.
If the bankruptcy trustee is able to seize any of these types of funds, the funds will be used to pay off the debts that were included in the bankruptcy.
How can this affect your decision?
Filing for bankruptcy may be a great solution to your financial problems, but there are times when it is not the right answer. For example, if you know that you will soon be receiving a huge check from an inheritance, you may forfeit the entire check. If you had not filed for bankruptcy, you could use this money to pay off the debts you owe instead of using bankruptcy to wipe them away.
On the other hand, if you do not believe that you will be receiving any large settlement in the near future, filing for bankruptcy might be a wise choice.
Making the decision to file is never an easy one, and it is always best to discuss your situation with a bankruptcy attorney before determining what you will do. Contact a company such as Sever Law Office for more information.