Advantages and Disadvantages of Filing for Chapter 7 Bankruptcy
In today’s economy, it is very easy to get into financial trouble. You can have a business venture fail or a divorce that causes bills to pile up. There many forms of bankruptcy which are called chapters. In this blog, we will focus on Chapter 7 by looking at the advantages and disadvantages of filing for Chapter 7 bankruptcy.
Chapter 7 Bankruptcy is when you are unable to pay your debts. Your assets are liquidated, and the proceeds go to the creditors to settle the debts. This should be seen as a last resort and is primarily used for business owners. You may feel that you are alone and that it is shameful to have to declare Chapter 7. You shouldn’t feel this way. There are plenty of famous people out there who have filed such as Walt Disney, Henry Ford, and Donald Trump. There are plenty of businesses that have filed as well, such as Toys ‘R’ Us, Blockbuster, and Macy’s.
To declare Chapter 7, you must be sure that you are not eligible for Chapter 13, where you can pay back some of the money owed to creditors. The whole point of Chapter 7 is to give the debtor a new start. You must meet certain criteria to file for Chapter 7:
How Chapter 7 Works
According to uscourts.gov, you must file bankruptcy in an area where you live or where your business is located. You must file with the court:
You must also provide tax returns or transcripts of tax returns before and during the bankruptcy process. There is a cost to file. The amount depends on how you are filing – a business owner, a single person or as a couple. This cost is usually more for a business owner since the case is more complicated.
Once you have filed, you will be appointed a trustee. This person will also determine if Chapter 7 is applicable to your case. The trustee can revoke the Chapter 7 based on fraud or an error in the paperwork. It is important to note that not all debts will be cleared. Debts not discharged include:
You can reaffirm a debt, meaning you can make a payment arrangement with a creditor.
The Negatives of Chapter 7
Although the main idea in filing Chapter 7 is to help the debtor financially start over again, there are negatives to filing.
Positives to Filing Chapter 7
It may sound odd, but there are some positives to filing.
Cibik & Cataldo Can Help with Chapter 7 Bankruptcy
You don’t have to face creditors alone. At Cibik & Cataldo, we have over 35 years of experience in bankruptcy law serving Southeastern Pennsylvania. We are ABC certified and know the bankruptcy laws that affect consumers and businesses. We also know all the exemptions that can help protect more of your assets and help you pass the “means test.”
We offer a free consultation to help you understand the financial position you are in and if Chapter 7 is right for you. If you do need to file for Chapter 7, we will help you with each step of the process so you will know what to expect. We will make sure all of the paperwork is accounted for and filed properly. Our primary goal to make sure your case goes smoothly. We’ll also provide guidance on life after a bankruptcy.
Contact Us Today
At Cibik & Cataldo, we are the Philadelphia bankruptcy lawyers – it’s all we do. We are here to help you navigate through the Chapter 7 process. There is life after bankruptcy. Schedule your free consultation by calling us at 215-735-1060 or emailing us. We can set up a meeting that works with your work schedule. We also offer 24/7 support!
We are a debt relief agency that helps people
seek bankruptcy protection under federal law