Filing Chapter 7 bankruptcy is never a pleasant experience. It is a big decision that should not be entered into lightly. In many cases, it results in not being responsible for your finances and letting your spending get out of control. Filing for Chapter 7 bankruptcy can also result from a reduced income or job loss, expensive medical bills, unexpected emergencies, or catastrophic property damage.
You should only file for Chapter 7 bankruptcy when you are sure your financial problems are beyond your ability to pay back the debt you owe. It is an affordable and legal way for you to relieve your financial stress. Bankruptcy may be a short-term solution to your financial situation that can help you avoid a possible catastrophic financial event.
What is Chapter 7 Bankruptcy?
A good thing about Chapter 7 bankruptcy is that it can help you become debt-free. Chapter 7 bankruptcy is a legal process that clears away your unsecured debt, like credit cards. This process should be your last resort if you fall too far behind on your monthly payments and need to reset your financial situation. Yet, Chapter 7 bankruptcy will have a long-term negative impact on your creditworthiness. A bankruptcy can stay on your credit report for up to ten years.
What to Address When Filing for Bankruptcy
There are two issues to address when you file for Chapter 7 bankruptcy.
Know Total Unsecured Debt
First, you need to know the total amount of your unsecured debt and the creditors who extended credit to you. Your creditors will receive notice of your pending bankruptcy case. This notice allows the court can place a stay on your debts to prevent your creditors from collecting payments.
Avoid Making Additional Purchases
Second, you should not use any credit cards or other unsecured debt to make additional purchases. Using a credit card before filing bankruptcy may result in not having the debt on your credit card erased, especially if the purchase was for luxury goods and services. 90-days is a general rule as to when to stop using credit cards before filing Chapter 7 bankruptcy. When using a credit card before filing bankruptcy during the 90 days, that debt is presumed non-dischargeable.
Timing is everything when facing bankruptcy. At a certain point, you may not be able to erase all your unsecured debt. Creditors can object to your bankruptcy. If they win, then you will need to start making the minimum payments. Let your bankruptcy be an opportunity to get your finances and spending habits under control. Chapter 7 bankruptcy can provide you with financial relief when you are out of options.
File for Chapter 7 Bankruptcy in Michigan
If you need more help with the bankruptcy process, contact Moran Law Firm. Our Michigan bankruptcy attorneys can help you get a fresh start on your finances. In addition to Chapter 7, we also provide Chapter 13 bankruptcy.
