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Chapter 7 Bankruptcy Info
Chapter 7 is the bankruptcy provision most frequently used by individuals. Those who reside in, or own property or a business in, the United States can file for Chapter 7 bankruptcy. Chapter 7 involves the complete liquidation of a debtor's property to pay creditors and wipe out remaining debts, giving the debtor what's known as a fresh start. It's important to know that Chapter 7 bankruptcy will stay on a person's credit report for ten years. However, it is likely that if you believe you need to file for bankruptcy, your credit has already been affected by your high debt.
In a Chapter 7 bankruptcy, individuals can wipe out many types of unsecured debt. Unsecured debt is debt that you do not have to put up collateral for, such as a debt incurred from a credit card, or medical bills. The Chapter 7 bankruptcy filing process takes about four to six months. Before you can file for Chapter 7 bankruptcy, you must go through credit counseling with an agency approved by the Untied States Trustee, and complete a debtor
education course. While you are allowed to keep some of your assets, other assets are sold by the interim trustee to repay some of your creditors. The interim trustee is an individual appointed by the United States Trustee, and many times will oversee the entire bankruptcy process.
It is important to know that not all debt is discharged under Chapter 7 bankruptcy. Mortgages typically survive bankruptcy, as do car payments. This means that while you will not be forced to sell your home when you file for Chapter 7, it may still be foreclosed on. Child support, spousal support, back taxes that are less than three years old, and any judgments from a court are generally not discharged either. Student loans may be discharged, but only if the debtor is able to show extreme hardship, which is difficult to prove.
Advantages to a Chapter 7 Bankruptcy Filing in South Carolina:
- The amount of debt you can erase is not limited.
- Unpaid balances due after assets are distributed are erased ("discharged" in bankruptcy language).
- Wages you earn and property you acquire (except for inheritances) after the bankruptcy filing date are yours, not the creditors or bankruptcy court.
- There is no minimum amount of debt required.
- Your case is often over in about 3-6 months, enabling you to get out from under the burden of debt quicker.
Disadvantages to a Chapter 7 Bankruptcy Filing in South Carolina:
- You lose your non-exempt property which is sold by the trustee.
- Some debts survive and can be collected after your case is closed (e.g., mortgage liens).
- If facing foreclosure on your home, lender's efforts are only temporarily stalled by filing.
- Co-signors of a loan can be stuck with your debt unless they file for similar protection.
- You can file this type of bankruptcy only once every eight years.
- Bankruptcy damages your credit rating.
- It is difficult to withdraw from a Chapter 7 filing.
READ BEFORE FILING A CHAPTER 7 BANKRUPTCY IN SC
- The Trustee can go after any property in which you have equity above the state exemption(s). In fact, your property is the Trustee's property until the Trustee decides to abandon the property at the Trustee hearing. DO NOT SELL OR TRANSFER ANY OF YOUR PROPERTY AFTER FILING UNLESS YOU HAVE CONSULTED ME FIRST.
- The Trustee can go after your tax refund if you haven't received it yet. In fact the Trustee can go after your next year’s refund starting in October. If you anticipate a refund, you need to list it.
- The United States Trustees look at the prior 6 months closely. You need to list all income within the 6 months prior to your filing. This includes money from any source to include: employment, loans, 401(k) withdrawals, unemployment, gifts, inheritance and government sources.
- You must list all property in which you have a legal or equitable interest in. If you are unsure, tell me.
- You must list all your banking accounts and the amount in each account on the day of filing.
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