Seven Facts You Should Know About Chapter 7 Bankruptcy
If you are considering filing for Chapter 7 bankruptcy, it is important that you separate fact from fiction. As a bankruptcy attorney in Wichita, Kansas, I know there is a lot of misinformation about bankruptcy. Here are seven facts about Chapter 7 bankruptcy to help set the record straight:
1. You won’t lose all your property.
One of the most prevalent myths surrounding bankruptcy is that you will lose all your property if you file. Even though Chapter 7 bankruptcy is called “liquidation”, exemption laws allow people who file bankruptcy to retain certain property. In many instances, people may retain all of their property in a Chapter 7 bankruptcy.
People filing for Chapter 7 bankruptcy in Kansas typically utilize exemptions to protect their principle residence, vehicle, retirement accounts, clothing, jewelry, life insurance, household goods and furnishings, and other types of property. Be sure to visit with a bankruptcy lawyer about whether your property can be protected if you file for Chapter 7.
2. You can afford to file.
Many people think they cannot afford to hire a bankruptcy attorney. However, bankruptcy attorneys generally offer low initial retainers and flexible payment plans. There might be a way to pay for your Chapter 7 bankruptcy with your future tax refund, too. And hiring a lawyer to help you with your bankruptcy is an investment in your financial future.
3. Not filing has costs, too.
Not dealing with your debt problems can result in creditor harassment and civil lawsuits, which take your peace of mind. Further, judgments can lead to garnished bank accounts and wages, which take your money. If bankruptcy can put an end to your debt problems, why wouldn’t you file before you are subjected to these “costs” of not filing?
4. Creditors will stop calling.
Clients are often amazed when I tell them that creditors will suddenly stop calling them once their case is filed. But it’s not magic, it’s federal law. The automatic stay of bankruptcy requires creditors to cease all collection attempts, including interrupting you at dinner.
While filing a Chapter 7 bankruptcy has many other benefits, including the eventual discharge of certain debts, just getting creditors to leave you alone will be the first thing you will notice.
5. Life goes on.
To file bankruptcy, you will have to supply your attorney with information about your debts and your assets. After a few appointments with your attorney, your case will be ready to file. After that, you will probably go to court one time—for what is called a “Section 341 Meeting of Creditors”. But don’t let the name fool you, creditors rarely show up. This meeting is not even in front of a judge—typically the only people that appear at the hearing are your attorney and the Chapter 7 trustee.
All of this happens in about first month after your case is filed. After that, your attorney will keep you informed regarding any happenings in your case, but you will probably not be as involved in the process. This means that you can focus on getting back to your life as normal.
6. You will get credit again.
Believe it or not, credit is available shortly after bankruptcy. Until you rehabilitate your credit, you can expect to pay higher interest rates and the terms may not be favorable. But bankruptcy allows a fresh start and an opportunity to rebuild your credit worthiness.
7. You’re not alone.
Over 1.3 million people filed for personal bankruptcy last year. Celebrities in Beverly Hills, California filed. Regular people in Wichita, Kansas filed. The odds are you know someone who has filed bankruptcy. Think you are alone? Think again.