Chapter 7 Bankruptcy May Change Your Life

Chapter 7 offers many potential benefits. As soon as you file, creditors will no longer be allowed to call you, write you, sue you or garnish your wages. It will also put a temporary halt to any home foreclosure proceedings. When the bankruptcy is complete, your unsecured debts (such as medical bills, credit card debt and utility bills) will be erased.

No. Chapter 7 occasionally requires you to liquidate certain assets to repay your creditors, it does not mean losing everything. Liquidation only occurs in certain unusual situations. Federal and state exemptions allow you to keep a certain amount of personal property.

Contrary to popular opinion, filing bankruptcy won't permanently destroy your credit score. In fact, it probably won't take nearly as long as you think to get approved for credit cards and loans again. Wiping out old debts through bankruptcy can actually improve your credit in some cases because you won't continually be behind in your payments.

No, not everyone qualifies. You must pass a "means test" first to prove that your income and assets fall below a certain level. However, even if you make too much money to qualify for Chapter 7, you can file for Chapter 13 bankruptcy instead.