Chapter 7 Bankruptcy: Myths and Truth
Chapter 7 is the most common form of bankruptcy, and it’s the one many Raleigh and Cary residents ask about when meeting with a bankruptcy lawyer. But there are still a lot of questions and misperceptions about how Chapter 7 works.
Chapter 7 bankruptcy is designed to give you a fresh start. It’s sometimes called “straight” bankruptcy or “no asset” bankruptcy, and wipes out most types of debt. Typically, the majority of people that file Chapter 7 bankruptcy have low to moderate income and have basic household items and assets.
Let’s break down a few of the myths surrounding this process.
Myth: Anyone can file for Chapter 7 bankruptcy.
Truth: Those who file under Chapter 7 are limited to a certain amount and type of assets. In addition, there are income restrictions for Chapter 7. The income limits are usually adjusted yearly to keep up with the cost of living, which can add to the confusion, but most low- to medium-income families qualify.
Myth: Filing bankruptcy means you keep/lose everything.
Truth: Filing a Chapter 7 bankruptcy can cancel most debt, but there are consequences. When you file bankruptcy you are allowed to keep certain property. This is called exempt property. When you file you relinquish your rights to your property until the Trustee determines that you have nothing available to liquidate to pay your creditors. Most people have very little property that is not exempt, so many Chapter 7 bankruptcy filers keep most or all of their property. You can usually keep your work equipment and your car. The State of North Carolina also allows exemptions for homes and other personal possessions. Still, just because someone else you know had a certain result with Chapter 7 bankruptcy doesn’t mean you will, too.
Myth: Filing for Chapter 7 bankruptcy is the same for everyone.
Truth: There is no such thing as a cookie-cutter bankruptcy filing. Each case is individual and must be looked at in that way. When you visit my office, you’ll meet with me, an attorney, to discuss your specific case and how I can help.
A Chapter 7 bankruptcy is not for everyone. To find out if it’s the right path for your debt-free future, contact the Law Office of Dennis Jay Sargent Jr, PLLC for a free consultation.