While Chapter 13 bankruptcy is an opportunity that is made widely available to most American adults who are struggling with debt, the option of filing for Chapter 7 bankruptcy is reserved for far fewer potential filers. Because qualifying unsecured debts can be discharged via a Chapter 7 filing without a requirement to pay back one’s creditors, the government reserves this opportunity for low-wage earners. If a debt-laden individual meets the means test eligibility criteria for Chapter 7 bankruptcy, they may find that this debt relief option has the potential to free them from significant financial burdens.
Primary Benefits
Once a Chapter 7 filing is received by the courts, an automatic stay is put into effect immediately. As a result of this legal protection, most creditors are prohibited from demanding repayment or pursuing debt-related legal action while a filer’s case remains unresolved.
After a Chapter 7 case has been navigated successfully, a filer’s eligible unsecured debt is discharged by the court. This means that a filer’s credit card balances, medical bills, personal loans, and other qualifying accounts will never again be that filer’s responsibility to repay.
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