Federal bankruptcy laws permit people with significant debts to obtain a fresh financial start.
If you declare Chapter 7 bankruptcy, you can settle unsecured debts with your creditors. However, before you declare bankruptcy, you should determine if you meet the eligibility requirements.
Chapter 7 bankruptcy eligibility
If your income is less than the median income in Delaware, you are likely eligible to declare Chapter 7 bankruptcy. However, if you earn more than the median income, you have to prove that your disposable income is insufficient to pay your debts before you can declare Chapter 7 bankruptcy. You can undergo a financial evaluation known as a means test to determine income eligibility.
To declare bankruptcy, you must also complete a credit counseling course. Furthermore, you cannot declare Chapter 7 bankruptcy again if you declared a previous Chapter 7 within the past eight years. Additionally, declaring bankruptcy cannot discharge all debts. For instance, you may still have to pay taxes and student loans after declaring bankruptcy. Nevertheless, Chapter 7 bankruptcy can help you settle credit card debt. unpaid medical bills, personal loans, payday loans and old utility bills.
Effects of declaring bankruptcy
Declaring bankruptcy can negatively impact your creditworthiness. However, bankruptcy can also help you move on from unsecured debts and start over financially. You can clear most personal debts that do not involve collateral. After you declare bankruptcy, you can focus on settling secured debts, rebuilding your credit and attaining long-term financial health.
Although there are drawbacks to declaring Chapter 7 bankruptcy, it can also help you improve your financial situation over time. You can examine your debts and income to determine if bankruptcy can help.