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We all know the negative stigma that surrounds filing for bankruptcy. This perception of bankruptcy has led many families to consider it as a last-resort evil—something that they should be ashamed of and avoid at all cost, even to the detriment of their family’s financial well-being. However, if you and your family are struggling to survive, there is no shame in reaching out for help. A Chapter 7 bankruptcy might just be the lifeline you need to get back on your feet and gather your financial bearings.
If you and your family have been struggling financially, either due to the unprecedented effects of 2020 or events that occurred before, and are facing an impossible situation, a Chapter 7 bankruptcy may be the right choice for you.
What is Chapter 7 Bankruptcy?
Filing a Chapter 7 bankruptcy allows you to eliminate a large amount of your unsecured debt (e.g. credit card and medical bills) in a relatively short amount of time, pending the approval of a bankruptcy judge. A Chapter 7 bankruptcy does not require you to submit a repayment plan—in fact, it does not require you to repay your creditors at all. (This type of bankruptcy is also known as liquidation, whereas a Chapter 13 filing is known as reorganization, as it requires you to create a repayment plan that allows you to repay your creditors as well as stay on top of your current bills.)
What Would Filing For A Chapter 7 Mean For You?
First and foremost, filing for this type of bankruptcy means the elimination of a large amount of your debt. This means that you and your family can rest easy knowing that your wages will not be garnished to appease your debtors, and you will have a relatively clean slate.
Filing for a Chapter 7 bankruptcy will affect your credit reports, as will any type of bankruptcy and most alternatives. However, once you have filed, it can take only a few years to repair your financial standing and credit score if you work at maintaining your finances and avoid falling back into debt. Filing can also mean peace of mind knowing that you and your family are free from the debt that is burdening your lives, and that is much more important in the long run.
There are of course some alternatives to filing for bankruptcy, such as consumer proposals, but they carry with them certain stipulations that a Chapter 7 filing does not; mainly that you will still need to pay back a certain amount of money to your debtors. This may not be an option for you if you are already drowning in debt and collection calls. Consumer proposals are also a result of mediation with those who are harassing you and your family, something that can be difficult to achieve. If you need immediate help within a few months and do not wish to deal directly with creditors, filing for a Chapter 7 bankruptcy is your best bet at eliminating debt and ensuring that creditors do not come knocking at your door.
What Is The First Step?
So you have decided to file for a Chapter 7 bankruptcy, now what? First, you will need to meet with an experienced bankruptcy attorney to determine whether or not you qualify for Chapter 7 bankruptcy. Research your attorney options and look for one that offers a reasonable payment plan. This ensures that, after filing, you aren’t immediately jumping back into debt in order to afford your attorney’s legal fees.
Once you have found an attorney who can help you assess your financial situation, it is time to start the process of filing a Chapter 7 bankruptcy. If you have chosen your attorney wisely, this process should happen quickly, getting you that much closer to eliminating your crushing debt once and for all and getting back to a more stable financial footing.
Is It Worth It?
Bankruptcy was designed to help those who find themselves in impossible situations, and there is no shame in utilizing it when you find yourself beneath mountains of debt. That is why it is there, so, why not use it?
While bankruptcy and its implications may seem like a last resort due to its negative reputation, it can actually be the lifesaver at the end of your financial rope. If done correctly, filing for a Chapter 7 bankruptcy can help you and your family get your debt back under control and have you on your way to financial stability, and, in the end, that makes it all worth it.