4 Risks of Chapter 7 Bankruptcy

12 June 2018

Receiving Chapter 7 bankruptcy protection can rescue you from what seems like an impossible financial situation. It exists to allow individuals and married couples regain their economic health without having to give up their home and primary vehicle. This can all be done without losing your personal property like household goods, money in bank accounts, and retirement savings.

Simply filing a petition for Chapter 7 bankruptcy in Ohio immediately stops foreclosures, garnishments, and the threat of repossessions. This provides immediate relief to people who have had to deal with frequent phone calls and who find themselves involved in lawsuits.

An ethical Columbus Chapter 7 bankruptcy lawyer will also tell you that entering and completing the process does not come without risks. Here, we briefly describe four things everyone who considers seeking bankruptcy protection under Chapter 7 should know up front. You can learn more and find out if one of the experienced attorneys in the Columbus offices of the Calig Law Firm can assist you with preparing a petition or negotiating with creditors by requesting a consultation online. We also welcome phone calls at (614) 252-2300.


Chapter 7 Does Not Remove All Financial Obligations

A properly prepared Chapter 7 bankruptcy petition can eliminate all or most unsecured debts such as credit card balances, unpaid medical bills, and personal loans. It will not wipe out alimony, child support, or, except in special circumstances, student loans. Mortgage or rent payments will also continue to be due, and legal actions concerning a foreclosure or eviction may resume after bankruptcy protection is granted if you are unable to bring your mortgage current. If you are unable to bring your mortgage current, a Chapter 13 bankruptcy would allow you to catch up those payments.


Chapter 7 Means Letting Go of Your Credit Cards

You will have to surrender your current credit cards as a condition of entering Chapter 7 bankruptcy protection. You will also want to stop using your credit cards before filing your bankruptcy petition. Continuing to accrue debt while asking for debt forgiveness and relief will not please your creditors or the bankruptcy trustee who handles your case.


Chapter 7 Requires Going to Federal Court

Federal courts handle Chapter 7 bankruptcy in Ohio. Since the bankruptcy process is a court case, the petition you file and much of the financial information you submit will become public record. Accessing this information requires a court log in for a specific docketing site. Consulting with a knowledgeable Columbus bankruptcy lawyer will help you understand what information will become publicly available and how to take steps to minimize the negative impacts of public financial disclosures.


Chapter 7 Remains on Your Credit Report for 10 years

The fact that a court granted your Chapter 7 bankruptcy protection will remain on your credit report for up to 10 years. However, you will still be able to open a new credit card, secure a new car loan, and even buy a new home. These things will be attainable as long as you pay your bills on time and slowly rebuild your credit score.


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