Working with a Chapter 7 lawyer is the ideal way to file bankruptcy in Nebraska. Read on to understand the basics of filing bankruptcy Chapter 7.
Do you need a Chapter 7 lawyer?
Before you hire the right lawyer, you’ll want to learn about filing bankruptcy in Chapter 7. This helps you make the most informed decision when it comes to legal representation.
In this guide, we’ll show you everything you need to know about filing Chapter 7 bankruptcy.
What is Chapter 7 Bankruptcy?
Chapter 7 is the form of bankruptcy most frequently filed for in the U.S. It lets debtors get rid of personal liability for almost every kind of debt. This can be a way out of a financial black hole for many people who desperately need relief.
This consumer bankruptcy option is one of the quickest ways to get out from beneath major debt. Although you may lose some valuable assets in the bankruptcy process, many people find it’s worth it.
One other thing to know about Chapter 7 is it will be listed on your credit reports for the next 10 years. If you want to open a new credit card during that time, it can be next to impossible.
But if you already have a low credit score, filing for bankruptcy will likely make it go up, not down. It’s a good way to protect your long-term credit score. Falling even deeper into debt only makes it worse.
Do you need to file for Chapter 7 bankruptcy? Let’s look at the filing process. Keep in mind you will want to retain a Chapter 7 lawyer before you move forward with these steps.
Debts that Fall Under Chapter 7
People use Chapter 7 for most debts that don’t have collateral. This includes personal loans, payday loans, credit cards and medical debt, among others.
However, some kinds of debt aren’t covered under Chapter 7. These include child support payments, alimony, unpaid back taxes and student loan debt.
When to File Chapter 7 Bankruptcy
Is Chapter 7 right for you? Before you hire a Chapter 7 lawyer, be sure this is the best option to help you take care of your debts. Let’s look at the cases in which Chapter 7 is the right choice.
1. You Only Have a Few Assets
When you file, you’ll likely have to give up your most expensive assets, like a nice car. However, if you don’t have many assets, you don’t have much to lose.
2. Your Debts are Covered
If Chapter 7 doesn’t cover the kind of debts you have, then it’s obviously not the right choice for you. Make sure Chapter 7 covers most of your debts before filing for bankruptcy.
3. Your Debts Total Half Your Yearly Income
Do your debts add up to half of your yearly income or more? If so, you’re a good candidate for bankruptcy, since paying off these debts is next to impossible at your current income.
4. Your Debts Can’t Be Paid Off Quickly
Crunch numbers and see how long it would take you to pay off your debts.
If you’ll pay them off for five years or more, even after you put the most money you can spare toward them, you should consider Chapter 7.
Even if you have some debts not covered, like back taxes, filing may still be a good idea if you have other covered debts. Taking care of those covered debts frees income to take care of those debts not covered.
If Chapter 7 isn’t right for you, there may be other forms of bankruptcy that are a better fit. Of course, filing for bankruptcy isn’t your only choice. You can also try alternatives like a debt management plan.
Qualifications for Chapter 7
Even if you’re a good candidate for Chapter 7, there are still a few requirements you’ll have to meet.
1. Pass a Means Test
The means test covers your expenses, assets and income level.
2. Have the Right History
If you have a Chapter 13 bankruptcy in the past six years or have been discharged from Chapter 7 in the past eight years, you won’t qualify.
3. No Dismissed Petitions
If you had a bankruptcy petition dismissed in the past 180 days due to failure to appear or to follow court orders, you can’t file for Chapter 7. You also can’t file if you chose to dismiss the filing on your own due to creditors using the court to recover property.
Filing for Bankruptcy
Once you meet all the qualifications, you can file for bankruptcy. Here are the steps you’ll need to take.
1. Complete Counseling
You’ll need credit counseling before filing for bankruptcy. Do this within 180 days before you file and at a qualified nonprofit agency.
2. Hire an Attorney
Next, you need to hire a Chapter 7 lawyer.
3. Finish Paperwork
There is some paperwork you must file for your bankruptcy. Your Chapter 7 lawyer can help you file the bankruptcy petition and other necessary documents.
In order to do the paperwork, you should have information ready about your income, debts and assets.
Once you’re gotten this far, your creditors can’t request payment, sue you or garnish your wages.
4. Trustee Management
After you file, a trustee appointed by the court takes over.
5. Creditors Meet
Then you meet with your lawyer and your creditors to answer questions.
6. Eligibility Decision
At this point, your eligibility decision gets made.
7. Assets Liquidated
If you have valuable assets to sell, your trustee will have you sell them and send the money to your creditors. If you don’t have valuable assets, you’ll skip this step.
8. Financial Education
You’ll need to complete a financial education class before your case is discharged.
9. Debt Forgiveness
After all these steps are complete, you have to get your case discharged and your debts forgiven. This usually takes about three to six months.
Finding a Chapter 7 Lawyer
Do you need a Chapter 7 lawyer? We can help.
Contact us today to get your debts taken care of for a brighter financial future.