Filing Chapter 7 bankruptcy is a serious financial decision for individuals who have large amounts of debt they likely won’t ever be able to repay.
Though filing for Chapter 7 ultimately gives you a fresh financial start by eliminating debt, it may come with serious consequences, including negatively impacting your long-term personal credit health and the loss of valued personal possessions.
What is Chapter 7 bankruptcy?
Chapter 7 bankruptcy is liquidation bankruptcy that will discharge most of your unsecured debts.
“Among other actions, a bankruptcy court will issue a temporary stay on collection activities, so collectors will stop calling and wage garnishments will cease,” said Derek Jacques, bankruptcy attorney with The Mitten Law Firm in Southgate, MI.
Types of collection activities that may be halted temporarily include evictions, garnishments and repossessions.
“With Chapter 7, the court will take ownership of your assets, and assign a trustee to oversee the proceedings,” Jacques said. “The trustee will review your finances, debts, income, and assets.”
The court may sell non-exempt property to help pay back your creditors and also run a meeting between you and your creditors where you’ll answer questions about your filing.
Certain types of debts can be discharged In Chapter