It is difficult to not worry when money is tight. When a New York resident struggles to pay their bills or cannot cover the costs of their rent, they might worry about how they will provide for the ones they love. Debt and financial hardship are next to impossible to overcome without support.
One way that some individuals free themselves from the binds of overwhelming debt is through bankruptcy. Bankruptcy is a legal tool that has significant financial benefits for debtors. One common option for those facing mounting debt is Chapter 7 bankruptcy.
Qualifying for Chapter 7 bankruptcy
Not everyone is eligible to file for bankruptcy, and Chapter 7 has its own set of eligibility qualifications. To seek the protections of Chapter 7 bankruptcy, individuals must meet certain criteria, including:
- Is the filer’s income too high based on the means test?
- Does the filer have enough disposable income to pay unsecured creditors?
- Has the filer previously filed for bankruptcy within the time limitations?
- Has the filer attempted to defraud their creditors?
- Has the filer upheld his or her credit counseling requirements?
It is important that debtors seek individual counsel to ensure they qualify for Chapter 7 bankruptcy before they begin the filing process.
What happens in bankruptcy?
Once an individual qualifies and files for Chapter 7 bankruptcy, they will likely enjoy an automatic stay on collection efforts against their debts. They have time to evaluate their exemptions and sell off, or liquidate, property that they can use to pay off their unsecured debts. They can start over on clear financial footing to rebuild their credit and live without the stresses of debt.
Bankruptcy is not an easy process and it can take time to complete. The government designed the Bankruptcy Code to allow those facing overwhelming debt to eliminate certain unsecured debt and build toward a fresh financial future. Many individuals choose Chapter 7 due to the shorter duration and the elimination of debt rather than the creation of a repayment plan. Every situation is unique, however, and it is wise to thoroughly research your financial options.