Many people who are dealing with high amounts of debt consider filing for bankruptcy. Those who do decide to file will do so under a specific bankruptcy Chapter, and the Chapter that will benefit them the most will depend on their circumstances.
Those who decide to file for Chapter 7 bankruptcy are usually earning a low income or no income at all. This is because qualifying for Chapter 7 bankruptcy requires that you pass a means test to show that you have a limited income. In addition, those who decide to file for Chapter 7 bankruptcy tend to have a limited amount of assets. This is because a high proportion of the debtor’s assets will be liquidated. As a result, many high-asset individuals tend to be deterred by this.
Many people who file for Chapter 7 bankruptcy go through unfortunate situations that require them to file. The following are some of the most common events that lead a person to file for Chapter 7 bankruptcy.
Unexpected job loss
If you are living from paycheck to paycheck, losing your job can lead to rapidly increasing debts. You may find that you need to rely solely on credit cards to buy your basic necessities, or that you are unable to keep up with your mortgage repayments. In this case, Chapter 7 bankruptcy could vastly improve your situation.
Suffering an unexpected illness can affect a person’s finances in two ways. First, an illness will likely mean that you will not be able to work for a significant amount of time. As a result, you may lose wages. In addition, you may also be subject to overwhelming medical bills that could increase any existing debt that you have.
Going through a divorce can be complex and stressful. Depending on how assets and debts are divided, you may be struggling financially after your divorce is finalized. By taking action to file for Chapter 7 bankruptcy, however, you may be able to gain a fresh start.
Filing for Chapter 7 bankruptcy is a great way to tackle your debts. It is an efficient process, and it usually results in a complete debt discharge, even if you do not have a high number of assets to liquidate.