In a Chapter 7 bankruptcy, you file court papers asking that certain unpaid debts be wiped out.
Most debts are wiped out after a Chapter 7 bankruptcy, including credit card debt, medical bills, and civil judgments.
Bankruptcy also stops wage garnishment and harassment by collection agencies.
Studies show that in 96% of cases, people who file for chapter 7 get to keep all of their property. Most of the cases where property is taken by the court involve real estate or tax refunds.
But filing for bankruptcy is not a good idea for everyone. It is a serious step and you need to understand the costs of filing.
First, it's important to understand that the following debts cannot be canceled in a Chapter 7 bankruptcy:
- Student loans
- Loans on a car that you still own
- Unpaid child support or alimony payments
- Unpaid fines
- Most tax debts
- Debts due to fraud, theft or embezzlement
- Damages to another person caused by drunk driving or conduct done on purpose
- Debts from a property settlement in a divorce
- Some other types of debts
These debts must still be listed on the bankruptcy papers filed with the court, but they can’t be wiped out.
Second, there are certain things a bankruptcy cannot do, such as:
- Release you from credit card debts that happened right before the bankruptcy was filed
- Get rid of debts that you get after the bankruptcy is filed
- Allow you to discharge debts the court decides you can afford to pay, if you have enough income
- Allow you to keep valuable property, such as a vacation home, an RV or expensive jewelry
Finally, it's important to know that:
- Bankruptcy stays on your credit rating for 7 to 10 years
- It can cause strain in relationships with some creditors
- You may have to return property that is not paid for
- You can only get a Chapter 7 discharge once in an eight year period
- You may be able to protect your income and property without filing bankruptcy
Upsolve's service is free. But there are two things you may need to pay for.
(1) The $335 filing fee
(2) $24 for first online course required by law (before you file)
(3) $10 for second online course required by law (after you file)
If you earn less than 150% of the poverty line, you qualify for a fee waiver and you won't have to pay anything.
The following questions will help you figure out whether you qualify.
Including you, how large is your household?
Do you earn less than $17,820 a year?
Do you earn less than $24,030 a year?
Do you earn less than $30,240 a year?
Do you earn less than $36,450 a year?
Do you earn less than $42,660 a year?
Do you earn less than $48,870 a year?