A Chapter 7 Bankruptcy is a tool used by the United States courts to assist individuals in resolving their financial affairs. In fact, a chapter 7 bankruptcy allows the debtors to re-organize and ultimately repay their debts over time, or even discharge any portion of the debts.
Many people use Chapter 7 Business Bankruptcy because it works for them. However, if you are considering filing for one, these five signs can help you make an informed decision about whether that’s right for you.
You have a dischargeable debt of more than $10,000
You are eligible for Chapter 7 bankruptcy if you have a dischargeable debt of more than $10,000. This means that you will be free of debt after your bankruptcy is over. If you have less than $10,000 in dischargeable debts, then Chapter 13 might be the right choice for you.
Your credit score is already low, below 600
You can qualify for Chapter 7 bankruptcy if your credit score is lower than 600. If this is the case, then you should file a Chapter 7 because you won’t be able to secure any type of loan in the future. A low credit score can be solved with a Chapter 7 bankruptcy, and once it’s gone, you have the chance of getting loans.
You don’t own any expensive properties
If you own a home or any type of expensive property, Chapter 7 is not the right option for you. In this situation, once the bankruptcy is over, you will have to turn your home over to the bank that lent money against it.
Keeping up with payments is making it impossible to make ends meet every month
If you are paying off your bills and making ends meet with a lot of difficulty, then Chapter 7 bankruptcy is right for you. The most common reason people go bankrupt is that they can’t pay their debts. Chapter 7 bankruptcy can help eliminate that debt, and make it easier to make ends meet in the future.
You pass the means test because you earn under the median income in your state
Chapter 7 bankruptcy can help eliminate most types of consumer debt that are dischargeable. In the means test, the bank is looking to see if you can make ends meet and pay your debts. If you earn below the median income in your state, then it’s highly likely that you will pass this means test.