Is Chapter 7 Bankruptcy the Right Way to Solve Your Financial Woes?

If you find yourself falling far behind on paying your debts, bankruptcy is one possible solution to consider. The long time solution of bankruptcy has always been available to help someone in economic trouble obtain a fresh start on their financial life. By filing a Chapter 7 bankruptcy, an individual is allowed to keep certain property, which is considered “exempt.” If your assets qualify for these  exemptions, after Chapter 7 is filed and discharged you will be able to retain title or ownership of these properties.

The value of property that can be claimed as exempt varies from state to state. Some states mandate their own exemption lists, while others allow you a choice between the state exemptions and the federal exemption limits.

The following is a list of the federal exemptions currently allowed under Chapter 7:

• The homestead exemption: up to $20,200.

• One motor vehicle: $3,225,

• Household goods and clothing: $10,755

• Jewelry: $1,350

• The wildcard exemption: The interest in any property you own, not to exceed $1,075 plus $10,125 of unused amount of the homestead exemption, which totals $11,200.

• The tools of the trade exemption: $2,025,

• Life insurance is exempt (if its unmatured)

• Life insurance cash loan value of up to $10,755

• Professionally prescribed health aides

• Social Security benefits

• Unemployment benefits

• Public assistance

• Veteran’s benefits

• Disability benefits

• Alimony

• Child support payments

• IRAs and 401K plans up to $1,000,095

• Wrongful death payments

• Life insurance proceeds

• Personal injury claims not including pain and suffering or actual punitive damages, up to $20,200

• Certain retirement accounts

A Chapter 7 bankruptcy remains on an individual’s credit report for 10 years after the date of filing.

This may make credit less available to a filer – or available with less favorable terms – although simply staying in debt can have the very same effect. By filing bankruptcy, you may improve your credit worthiness over time.

Remember, you must wait 8 years before you may file Bankruptcy again. New credit extended post-filing is not covered by the discharge,  so often creditors are willing to extend credit to those who have filed for bankruptcy.

If you are finding yourself buried in debt and cannot see a way out, contact an experienced bankruptcy attorney to find out if Chapter 7 might be the right solution for you.

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