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Knowing if Chapter 7 bankruptcy is or is not right for you

For debtors in Glendale and throughout California who are facing insurmountable financial challenges, bankruptcy might appear to be an appealing lifeline. However, knowing under which chapter the person should file as well as other factors is essential for a successful resolution. For example, Chapter 7 is considered a liquidation bankruptcy. It is often cited as the best possible option for people who do not own a great deal of goods and would like to clear consumer debt. There are times, however, when Chapter 7 is not the best choice for the individual and they have issues that preclude Chapter 7.

People who are judgment proof should not file for Chapter 7. When a person is judgment proof, it means that property will be exempt from collection or they do not have enough to satisfy creditors who get a court judgment. Since the person is judgment proof, bankruptcy is not needed. If there are fraudulent charges on a credit card, creditors can file an objection to bankruptcy. For people who made major purchases for over $500, recently took out large cash advances, made multiple charges in more than one day and took part in other questionable activities, Chapter 7 will not solve the financial troubles.

Those who have filed for Chapter 7 and received a discharge in the past eight years or a Chapter 13 discharge within the past six years cannot file for Chapter 7. If a previous Chapter 7 or Chapter 13 was dismissed in the prior 180 days because of a debtor violating the court order or requesting a dismissal then they cannot file again. If there are too many debts that will still be in place after the bankruptcy, it is unwise to file. These can include child support, alimony, taxes that are less than three years past due, student loans and more.

If a debtor is at risk of losing property that is valuable such as a home or vehicle with large amounts of equity, necessary clothing that is costly, jewelry below a certain value, tools for a trade, public benefits, and household items, then Chapter 7 is not a good alternative. Not everyone's situation is ideal for a Chapter 7 bankruptcy. Having legal help can be useful in determining if bankruptcy is wise and if there are other choices that are preferable.

Source: findlaw.com, "Is Chapter 7 Bankruptcy the Right Option for You?" Oct. 2, 2017

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