Everything You Need To Know Before Filing A Chapter 7 Bankruptcy

While filing for a Chapter 7 bankruptcy is not necessarily the most fun experience, it can be a load off when you’re facing mounting debt and creditor lawsuits. The way Chapter 7 works is that it discharges unsecured credit card debt as well as medical debt and other forms of debt that are not backed by some form of collateral like a vehicle or a home. On your end, you would have to turn over certain assets that you cannot exempt using your exemptions. Most people don’t have significant assets to liquidate upon filing for Chapter 7. So, they can just quickly discharge debt they cannot afford to pay. If, however, the Debtor can afford to pay   the Trustee for unexempt property, the Debtor can work out a “buy back” with the Trustee to retain the collateral.

What will happen to my vehicle? 

For an individual Debtor, you can protect up to $1,000 in equity on your vehicle. If you still owe on the vehicle, Chapter 7 does not provide a means to make the loan current. In most cases, the value of the car minus $1,000 becomes the property of the bankruptcy estate. If you still owe on the vehicle, you can Reaffirm the debt and continue to make payment pursuant to the original terms and conditions of the contract you signed with the lender. Florida also offers , if  a Debtor is eligible, $4,000 in wildcard exemptions, that can be used to protect personal property.

If you are current on your car payments, but still paying, the bank will generally offer a reaffirmation agreement. If you can continue to make payments on the loan, then you should be able to keep your vehicle. Your bankruptcy attorney can help you through the process of navigating a car loan in bankruptcy. The important thing to consider is this: If you are facing creditor lawsuits, you are likely going to lose a lot more than you would by filing for bankruptcy.

What will happen to my debts in Chapter 7? 

Once you file for Chapter 7, all creditor actions against you, including lawsuits, are automatically stayed by the bankruptcy filing. The bankruptcy trustee oversees the process and any unsecured debt would be discharged. That means you no longer owe the money. As a tradeoff, a bankruptcy is placed on your credit report, but you may be able to rebuild your credit quickly. There are several means of doing this. The Chapter 7 remains on your credit report for 10 years, but future creditors only consider recent information to be relevant.

How do I rebuild credit after bankruptcy? 

There are multiple ways to rebuild your credit after bankruptcy, but one of the easiest is a secured credit-building loan. These loans help establish that you are capable of making on-time payments with little or no risk to the lender. Secured loans operate sort of like prefilled credit cards. You pay a certain amount to the financial institution and then keep a minimum balance on the card. Once you establish a history of making on-time payments, your credit score will begin to rise.

Talk to a Jacksonville Bankruptcy Attorney Today

The Law Offices of Carol M. Galloway represent the interests of Jacksonville residents who are struggling with their finances and considering filing for bankruptcy. Call our Jacksonville bankruptcy lawyers today to schedule a free consultation and learn more about how we can provide relief from mounting debt.