Chapter 7 Bankruptcy
Colorado Springs Chapter 7 Bankruptcy LawyersIn the minds of some people, bankruptcy has become a dirty word, a get-out-of-debt-free card that doesn’t sufficiently punish people who were financially irresponsible. While that may be true in some instances, we view the proper handling of a bankruptcy filing as providing our clients with the opportunity to wipe the slate clean, or to create a fair repayment plan to creditors. If you have questions call our Colorado Springs chapter 7 bankruptcy lawyers.
One of the most important questions our clients ask us if which type of bankruptcy they should file. In some cases, it is fairly easy to make a recommendation, and in other cases, the decision is more complicated. The two most common types of bankruptcy for individual filers is Chapter 7 or Chapter 13. Let’s focus on Chapter 7 bankruptcy, and explain how it works and why it may be the best choice for some of our clients.
What Is Chapter 7 Bankruptcy?Chapter 7 bankruptcy is sometimes known as ‘liquidation bankruptcy,’ because some or all of your property can be sold (or liquidated) to settle your debts. When you file Chapter 7, you can protect $5,000 of equity in your vehicles, or $10,000 if you are disabled or elderly. You can also protect $3,000 in household goods if you are single, and $6,000 if you are filing jointly with a spouse. Filing Chapter 7 also allows you to protect $60,000 worth of equity in a primary residence, or $90,000 if you are disabled or elderly. The main advantage of filing Chapter 7 is that it typically wipes away all unsecured debt, which refers to debt that doesn’t have any collateral. Unsecured debt can include:
- Medical Bills
- Credit Card Debt
- Bank Loans
- Deficiency Judgments
- Phone Bills