When Is Filing Chapter 7 Bankruptcy A Mistake?

Filing Is A Mistake If….

Filing chapter 7 bankruptcy is a mistake if you have assets that are going to be taken in exchange for your fresh start. It is one thing if you know that your assets are going to be taken and you’re willing to sacrifice them. It’s quite another thing to have the trustee demand your assets when you thought that they would be protected. This happens when people either underestimate the value of the property or fail to disclose the existence of particular property. Your attorney will do the best to protect your assets but he or she must know exactly what you possess.

Is The Debt Dischargeable?

It is also a mistake to file chapter 7 bankruptcy if the type of debt that you have is not going to be discharged. Recent taxes, parking tickets, child support, student loans and other debts incurred by way of fraud are not going to be eliminated in a chapter 7 bankruptcy. If you have those debts or if those are the majority of your debts and you’re looking to eliminate those, you will be making a mistake by filing a chapter 7. Those debts are going to survive a chapter 7 filing.

Do You Have The Ability To Reorganize?

It is also mistake to file chapter 7 bankruptcy if you truly have the ability to reorganize your debt. If your income is such that you are able to put something away each month towards your creditors, then you really should not file a chapter 7 bankruptcy. For one, the trustee is likely to bring a motion to dismiss your case for abuse. The only people who can file a chapter 7 are those that do not have the ability to reorganize under chapter 13. If you have income above the median or if you’re not passing the means test, then you should not file a chapter 7 because the case will likely be dismissed.

Is Your Debt Significant?

If your debt is not significant, then you might want to think twice about filing for chapter 7 bankruptcy. You can only file bankruptcy and receive a discharge under chapter 7 once every eight years. You do not want use up your discharge for very little in the way of debt relief. You want to hold on to that discharge just in case something catastrophic were to happen. So lastly, you do not want to file a chapter 7 bankruptcy case if the amount of relief is very small and if the amount of debt is manageable.

  • AS SEEN ON:Fox News Chicago
  • Chicago Sun-Times
  • Chicago Tribune
  • Daily Herald
Fox News Chicago Chicago Sun-Times
Chicago Tribune Daily Herald