Risks of Filing Chapter 7 Bankruptcy
Receiving Chapter 7 bankruptcy protection can rescue you from what seems like an impossible financial situation. It exists to allow individuals and married couples who become unable to pay their debts because they no longer have monthly income regain their economic health without having to give up their home and primary vehicle, and without having to sell off a majority of their possessions.
Simply filing a petition for Chapter 7 bankruptcy in Ohio immediately stops foreclosures, suspends liens, and stops garnishments, which provides immediate relief to people who have had to deal with frequent phone calls and who find themselves enmeshed 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 and approved Chapter 7 bankruptcy plan 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 arrangements to address underlying issues are not made.
Chapter 7 Means Cutting Up Your Credit Cards
You will have to surrender your current credit cards as a condition of entering Chapter 7 bankruptcy protection. You will probably also want to stop using your credit cards for a time before filing your bankruptcy petition. Continuing to accrue debt while asking for debt forgiveness and relief will not please your creditors or the bankruptcy court judge 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 records. This can mean more than potential embarrassment if you include a home-based business or other another type of sole proprietorship as part of your bankruptcy request. 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 a Long Time
The fact that a court granted your Chapter 7 bankruptcy protection will remain on your credit report for up to 10 years. While the note sits in your file, you will find it difficult to secure a new mortgage or a large car loan. You should be able to get new credit cards, but you will most likely need to secure the initial balances with cash deposits.
