A number of reasons factor into filing for bankruptcy, from costly medical bills to losing a job.
In 2020, 378,953 people turned to Chapter 7 bankruptcy as a solution, according to the United States Courts. While the process has complexities, knowing more about it may help you decide if you should file.
1. How will I benefit from filing?
As a person considering bankruptcy, you already have a tremendous amount of stress in your life. While filing certainly comes with cons, such as a negative credit score and potential loss of assets, it does provide numerous benefits. Chapter 7 offers a faster and less expensive way to achieve debt relief. Once you file, you no longer have to deal with collectors or potential lawsuits. In some cases, you may still get to keep some of your assets.
2. Will it eliminate all of my debts?
In general, filing for Chapter 7 bankruptcy results in most of your debts getting wiped out. This list may include medical bills, credit card balances and personal loans. Still, not all debts get eliminated. If you owe spousal or child support or owe back taxes, you will still need to cover those expenses. With bankruptcy, it does free of your cash flow to make those vital payments happen.
3. What documents will I need to provide?
Honesty and full disclosure must happen during filing. If you try to hide or transfer assets, you put yourself in a new kind of legal position. Along with creditors challenging what you owe, you may face criminal bankruptcy fraud charges. To avoid that, ensure you present all the necessary information, including assets, debts, income and expenses.
While you likely hoped to never have to file for bankruptcy, it offers relief and the chance to start fresh.