Bankruptcy can possibly give you a fresh financial start. If you qualify for Chapter 7 bankruptcy, the court gives you certain benefits as you resolve your debt.
Review the legal protections you receive if you decide to file for Chapter 7.
If you complete the Chapter 7 requirements, you can receive a discharge of eligible debt in about six months. The discharge generally includes credit cards, personal loans, and other unsecured debt, but not student loans, most taxes, or unpaid child support. You are no longer responsible for these debts after you receive a discharge.
Automatic temporary stay
After you file, the bankruptcy court issues a legal order called an automatic temporary stay. It prevents your creditors from contacting you or taking other actions to try to collect the unpaid debt. This is especially important if your debt has put you at risk of foreclosure, auto repossession and wage garnishment.
The court also protects a portion of your personal assets when you file for bankruptcy. You can keep your home, vehicle and household items up to a certain value. for example, you can retain up to $450,000 in equity in your primary residence, which increases to $1.1 million if you own a farm. Other exemptions include up to $5,000 for a vehicle, furniture and appliances up to a total of $11,250, and miscellaneous items such as clothing, musical instruments, and home health aides.
Understanding the protections of bankruptcy can help you make the right financial decision for your future and move forward with a clean slate.