When it comes to filing for bankruptcy, many people assume they can represent themselves. While some may be able to successfully navigate the bankruptcy process, others are better of seeking help from a bankruptcy attorney. This is especially true when seeking to file for Chapter 7. There are several aspects of the Chapter 7 process that require much attention to detail and should be carefully considered before the filing of the petition.
One of the biggest problems people face when filing for Chapter 7 is qualifying. Unlike Chapter 13, filing for Chapter 7 requires you to meet strict income standards. Bankruptcy laws state that your income must be less than the median income level of the state of residence. If your income is equal to or greater than the median income level of the state, you will not be eligible to file for Chapter 7.
While most people the total debt elimination the Chapter 7 process has to offer, it isn’t possible for everyone who qualifies. Depending on the type of debt you carry, the Chapter 7 process may not be able to eliminate all your debts. For example, secured debts are very difficult to manage in Chapter 7, unless you are willing to give up the asset that is secured against the loan. However, unsecured debts can be better managed since they do not tie any assets to the loan repayment, which makes them the best candidate for debt relief in Chapter 7.
Holding onto your assets is more challenging in Chapter 7 than in a Chapter 13 case. Since there is little repayment for debts, many of your assets could be at risk for liquidation in order to satisfy debt payments. However, bankruptcy exemption laws may be able to protect some of your main assets such as your house or car. Each state has various laws about which property and its value will qualify for exemption in bankruptcy.