What is Chapter 7 Bankruptcy?
Updated: Sep 5, 2019
What is a Chapter 7 Bankruptcy? Chapter 7 bankruptcy is also known as a “complete” or “liquidation” bankruptcy. It is finished within 4-6 months and gets rid of unsecured debts like credit cards, medical bills or lines of credit. All it requires is one up front payment to your attorney (we do set up payment plans if necessary), Chapter 7 does not require you to make any further payments to your creditors. Chapter 7 bankruptcy also stops any wage garnishments and sometimes allows you to get back part of the money that has been taken.
Will I lose everything if I file for Chapter 7? Michigan has what’s called “exemptions” that allow a debtor to keep a certain amount of property. The goal of the exemptions is so that once a bankruptcy case is over, the debtor and their family are not left on the street with nothing. Michigan allows debtors to keep a certain amount of equity in a house, cars, jewelry, clothing, and other assets. Generally, no one files a Chapter 7 case if they will lose anything. If a debtor has too many assets to file a Chapter 7 case, they may file a Chapter 13 bankruptcy case that allows debtors to keep more property.
What would happen if I don’t file for bankruptcy? If you don’t file for bankruptcy, you risk being sued by your creditors, having your wages garnished, your tax refunds taken, your car repossessed or even your house being sold. Bankruptcy immediately stops any of these actions from being taken and in some cases can even retrieve vehicles or money that has been garnished.
How will this affect my credit? A bankruptcy is on a person’s credit report for 7-10 years after the date of filing. However, bankruptcy is very common and if creditors didn’t extend credit offers to everyone that filed for bankruptcy, the creditors would not make any money. Generally, after a Chapter 7 case is over, it is possible for debtors to qualify for a house mortgage within 2 years if that is their goal. Ask your attorney how to raise your credit score as quickly as possible after a bankruptcy case is over.
Contact Attorney Allison Greenlee Korr at 269-381-4471 to schedule a free bankruptcy consultation today to go over your personal bankruptcy options or see other topics below.
“We are a debt-relief agency. We help people file for bankruptcy relief under the Bankruptcy Code”.