Filing for Chapter 7 bankruptcy protection in Columbus, Ohio, will stop repossessions and wage garnishments. Learning this might be enough to make you consider going through the bankruptcy process, but you should try to learn as much as possible before taking that step.
We cannot tell you everything you need to know about Chapter 7 bankruptcy in this brief article, so we invite you to call (614) 252-2300 to speak with a Calig Law Firm attorney about your financial situation and options. You can also schedule an appointment online by completing this contact form.
Here are five of the most basic things to know about Chapter 7.
Fact 1: Chapter 7 protection is only available to people below a certain income limit.
To qualify for Chapter 7 bankruptcy, you must be below what the court calls median income. The amount of money allowed increases as the household size increases; however, the amount for one person currently is $47,582.00 (before taxes).
Fact 2: Your home business may qualify for Chapter 7 bankruptcy.
Chapter 7 is generally available only to individuals and married couples. In some circumstances, however, it can also extend to debts owed through a business.
If you are self-employed or an independent contractor, you should ask a Columbus bankruptcy attorney about having personal and business debts included in your bankruptcy filing.
Fact 3: Chapter 7 will allow you to stay in your house if you are current.
Filing for bankruptcy suspends foreclosure proceedings. While that will certainly be welcome, if you are behind on your home, the court will require you to surrender the home. If you are current on your home, the court and the mortgage holder will simply require you to remain current on your mortgage payments if you want to keep your home.
Fact 4: Chapter 7 will not wipe out all of your debts.
A Chapter 7 bankruptcy eliminates many of your unsecured debts. It also preserves debts for which you put up collateral and debts a court ordered you to pay.
What this translates to is that you can expect credit card and medical debts to go away. You will probably still owe car payments if you do not give up the vehicle. Student loans will likely remain, as well, but you should consult with a lawyer on this.
Debts that will not be forgiven include
You may be able to negotiate repayment plans with creditors as part of the Chapter 7 bankruptcy process.
Fact 5: Chapter 7 will have an effect on your credit score.
Bankruptcy protection is a financial lifeline that can give you a clean slate. The fact that you entered Chapter 7 protection will remain on your credit report for 3-10 years. During that time, you will initially find it difficult to take out a mortgage or get a competitive interest rate on a loan. The positive side of this is that you will be able to quickly rebuild your credit. Since the debts that were negatively impacting your credit score will now be discharged, all timely payments made on new debts will positively report to your credit. This will allow you to improve your credit score dramatically in a relatively short amount of time.