Chapter 7 bankruptcy is one of the ways you can get debt relief. However, filing Chapter 7 bankruptcy will make you learn it the hard way. If you have left your debts unattended for a considerable time period, debts won’t reduce but they will continue piling up and so will your troubles. Bankruptcy is usually the last debt help option opted for when all other debt solutions have failed to give you the desired result.
Chapter 7 bankruptcy also referred to as “liquidation” is the process in which a court appointed trustee will liquidate or sell your non-exempt assets so that the proceeds of the same can be used to pay off your creditors. It may be mentioned here that non-exempt assets are those that you cannot retain when you file Chapter 7 bankruptcy. There are state as well as federal exemptions and you may enjoy either state exemption or federal exemption. A debtor is not allowed to enjoy both exemptions.
Means test in Chapter 7 bankruptcy
Chapter 7 and Chapter 13 are the most filed and as per the new Federal Bankruptcy Laws that were introduced on October 17th 2005, the federal government has introduced certain changes that have changed the way bankruptcy was filed earlier. The new federal bankruptcy laws have been made more stringent. One of the prominent changes that were introduced is the Means Test in Chapter 7 bankruptcy.
Means test finds out your eligibility to file Chapter 7 bankruptcy. When you undertake the means test, your income is compared to the median income of a similar household in the same state in which you reside. If it is found that your income is less than the median income, you qualify for Chapter 7 bankruptcy. If not, your bankruptcy attorney may suggest that you file Chapter 13 bankruptcy.
Effect of Chapter 7 bankruptcy on your credit score
Filing bankruptcy impacts your credit score in a negative manner. It damages your credit rating and gets recorded in your credit report for a period of 10 years. If you file bankruptcy, there are many adverse effects that you have to face.
You may not get employment as per your choice; your lender may not extend fresh credit, your insurance carrier may not give you a good deal or a landlord may deny you a rented premise. However, you have ample opportunity to repair your credit rating and become lenders’ favorite again.
Chapter 7 bankruptcy also referred to as “liquidation” is the process in which a court appointed trustee will liquidate or sell your non-exempt assets so that the proceeds of the same can be used to pay off your creditors. It may be mentioned here that non-exempt assets are those that you cannot retain when you file Chapter 7 bankruptcy. There are state as well as federal exemptions and you may enjoy either state exemption or federal exemption. A debtor is not allowed to enjoy both exemptions.
Means test in Chapter 7 bankruptcy
Chapter 7 and Chapter 13 are the most filed and as per the new Federal Bankruptcy Laws that were introduced on October 17th 2005, the federal government has introduced certain changes that have changed the way bankruptcy was filed earlier. The new federal bankruptcy laws have been made more stringent. One of the prominent changes that were introduced is the Means Test in Chapter 7 bankruptcy.
Means test finds out your eligibility to file Chapter 7 bankruptcy. When you undertake the means test, your income is compared to the median income of a similar household in the same state in which you reside. If it is found that your income is less than the median income, you qualify for Chapter 7 bankruptcy. If not, your bankruptcy attorney may suggest that you file Chapter 13 bankruptcy.
Effect of Chapter 7 bankruptcy on your credit score
Filing bankruptcy impacts your credit score in a negative manner. It damages your credit rating and gets recorded in your credit report for a period of 10 years. If you file bankruptcy, there are many adverse effects that you have to face.
You may not get employment as per your choice; your lender may not extend fresh credit, your insurance carrier may not give you a good deal or a landlord may deny you a rented premise. However, you have ample opportunity to repair your credit rating and become lenders’ favorite again.
0 comments:
Post a Comment