Debt can be a crushing financial obligation that prevents you from enjoying life and growing as a person. Luckily, bankruptcy protections can alleviate many of these problems by canceling or restructuring most of your debts. However, there are many types of bankruptcy protections, but Chapter 7 bankruptcy is among the most common because it is extremely friendly towards the debtor. Yet, most people do not possess the formal training or experience to understand the nuances of bankruptcy law. Here are some answers to questions you might have in this situation.
Can Anyone File For A Chapter 7 Bankruptcy?
There are numerous limitations in place that can directly influence which type of bankruptcy you qualify to receive. The requirements for filing a Chapter 7 bankruptcy are highly complex and depend on a litany of factors. However, the general rule is that a person must be unable to make payments on reduced debt amounts. This is determined by reviewing the debtor's full financial statements to determine their monthly income and expenses.
What Happens To Your Debts During These Proceedings?
Unfortunately, filing for a bankruptcy can be a lengthy process, and many clients may worry about what will happen with their debts as this slow process moves forward. Considering the aggressive steps that creditors can take to collect on debts, it should not be surprising that this is a major concern.
Luckily, it is possible for your attorney to halt any collection actions against while this process is occurring. This is done by filing a stay with the court, and under this type of protection, creditors must stop all collection actions and any communications must go through your attorney. If a creditor attempts to violate these rules, you should immediately let your attorney know because the creditor may be liable for punitive damages for these actions. After the bankruptcy has been finalized, the stay will be lifted, your debts canceled and you can start again with a clean financial slate.
Going deep into debt can be a terribly stressful experience for almost anyone. In addition to having your wages garnished and assets seized, you may find that the damage to your credit score makes it hard to get an apartment or house. Fortunately, a bankruptcy filing can lift these debts and give you the opportunity to rebuild your credit with a clean slate. By understanding that there are strict requirements for filing for this type of protection and that a stay can be issued to protect you as this case develops, you can better protect your rights against aggressive collection actions.
For more information, contact a bankruptcy lawyer like Morrison & Murff.
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