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The benefits of filing chapter 7

On Behalf of | Apr 5, 2021 | Bankruptcy |

Fear can be debilitating, especially when it comes to possibly losing your house due to bankruptcy in California. Filing Chapter 7 is the last resort if you have overwhelming debt. However, it can help you get out of the financial hole you may find yourself in due to medical bills, unemployment, divorce, or other major life events.

According to the U.S. Courts, Chapter 7 involves a trustee gathering and selling a debtor’s non-exempt assets to repay creditors according to the bankruptcy code provisions. You may keep your home, car and many other assets, depending on your unique situation. The trustee negotiates with creditors, lifting that burden from your shoulders. Once the court accepts your petition, its benefits begin almost immediately.

Stop debt collectors

You receive a case number after filing, and an automatic stay goes into effect. The stay prohibits creditors from contacting you or taking legal action. They cannot repossess your vehicle or begin foreclosure proceedings on your home. At the 341 meeting, the court-appointed trustee asks questions about your Chapter 7 filing. You must cooperate by answering questions and providing copies of requested documentation, including tax returns. Once complete, bankruptcy can discharge the majority of your debt.

Begin rebuilding credit

Chapter 7 takes approximately six months, and you must complete a credit counseling course before submitting the petition. A second course follows the bankruptcy proceedings and focuses on personal finance management. It can help you understand how to take advantage of your fresh start. You can begin rebuilding your credit quickly by opening a credit card account, using it responsibly and cleaning up your credit report.