Bankruptcy Lawyer — Bankruptcy Petition Paper in Livonia, MI

A Chapter 7 bankruptcy is the most common type of bankruptcy that people file today. This bankruptcy option usually wipes out all unsecured debt and is the bankruptcy that will give a person the best fresh start after everything is discharged.

However, you should know that Chapter 7 does have certain requirements that may apply depending on your specific situation. Here is what you need to know before you move forward with your Chapter 7.

Know Which Debts Are Secured

A common misconception about Chapter 7 is that it’s a magic wand that gets rid of any and all debt you have, but that is not the case. Secured debts are often not discharged during a Chapter 7.

For example, if you have a lien on your property, you will want to reaffirm that the bankruptcy will not affect that property before you go through with the bankruptcy. Other types of secured debt include child support, alimony, student loans, court-ordered debts, and debts to government agencies.

Know That Your Most Recent Debts May Not Be Discharged

Most unsecured debt such as your credit card bill can be discharged during a Chapter 7. However, you will need to avoid excessive spending right before your bankruptcy.

When your creditors receive word about your bankruptcy, they will look at your most recent purchases. If it appears that you intentionally ran up your bill in the days or months prior to filing, the creditors may object to the discharge. If the court sees you did not act in good faith, you may still be responsible for the most recent unsecured debts.

Know That You Have to Be Meticulous

A bankruptcy court makes its decision by looking at all of your current assets and then compares that total to the amount that you owe.

You need to be very careful here. If you are not very precise and methodical about disclosing all of your assets, your bankruptcy may be denied. And if a court finds that someone to has deliberately withheld assets from the Chapter 7 paperwork, they may even face charges for fraud or perjury.

Know That You Need an Attorney

For the best chance of success with your Chapter 7, you need to hire a seasoned bankruptcy attorney to walk you through the process. A good attorney can double check your paperwork and make sure everything looks good before your file. Your attorney can help take care of any potential red flags before they cause a problem in court.

A good bankruptcy attorney can also help you come up with a plan for after the bankruptcy. He or she may be able to help you set a budget or come up with ways to move your finances around in order to ensure that you likely will not face bankruptcy again.

A Chapter 7 bankruptcy can help give you and your family a brand-new start. But a Chapter 7 is not a Get Out of Jail Free card. You still have specific requirements you need to keep in mind and certain types of debt that might not be discharged. For best results, you need to hire a bankruptcy expert to walk you through the process.

Phoenix Law is a family-owned and -operated law firm specializing in cases just like yours. We know that time is of the essence when dealing with debt problems, so contact us today to get an assessment of your situation. We can help you move forward with your Chapter 7 bankruptcy or come up with another solution that better fits your needs. We are also always happy to answer your questions and concerns.