Chapter 7 Bankruptcy California is also referred to as Straight Bankruptcy, because it is pretty straight forward, and it ends soon too. While the other alternative Chapter 13 might just keep going for months and months even after applying for bankruptcy. If you are eligible for Chapter 7, it is the best option. Why do professionals say so, what are the key benefits? All these questions will be addressed below-
- Release all/most of the unsecured debts
Chapter 7 categorized the debts into two categories. This happens under the Chapter 13 code also, but the debts released is pretty less significant compared to Chapter 7. The importance of releasing unsecured debts comes to the scene when the vicious cycle of high-interest rate and ever so slowly growing income can never be bridged. Since the unsecured debts carry the highest interest rates with them, it is unlikely one will ever be able to repay the loan especially when they are considering bankruptcy. Release of such unsecured debt which may be payday loans, credit card bills, etc., give a fresh outlook and decrease debt to income ratio significantly. The credit score is impacted but at the same time, it is a notification to the lenders for a fresh start. If you need help in analyzing ways to release most unsecured debts or credit score planning, Recovery Law Group is the website you should be checking out now.
- Preventing the lender’s from taking some serious action
Filing bankruptcy can prevent lenders, creditors and other companies/individuals with dues for action against the debtor. By filing for bankruptcy under Chapter 7 in the bankruptcy court, the filer activates a shield which protects him/her from any serious action undertaken by the lenders. This phenomenon is referred to as ‘automatic stay’ in law terms. As per law, collection phone calls, collection threats, wage garnishments, asset attachment, etc., are put on hold until and unless the court has concluded. Even though the ‘automatic stay’ shield is temporary and might last until the creditors propose to the court that they try and get their dues to the earliest, it offers a considerable amount of time to make certain things in favor of yourself.
- Love your car, keep your car
Car is a necessity and not a luxury in most cities of the United States. Most of you shall agree with the fact no matter how good the public transport of the city is, surviving without a car in the United States can be extremely difficult. The biggest nightmare of Chapter 7 bankruptcy is to lose your car. However, there are several ways of securing your assets which can also be your car. The car can be relieved by you at the current market price. This can be done under the 722 Redemption rule, which is very helpful under heavily depreciating assets like an automobile. The payment for the current market value has to be outright though. This can be better understood by an example. Say Matt had bought a car for $10,000. The present market value of the car is $4,000. Matt can get rid of the $10,000 loan by paying off $4,000 to the auto loan company/person.
Additionally, there are specific lenders who offer credit under the 722 Redemption rule with the car as the security to pay cash up front if you do not have so much cash outright immediately. If you would not like to keep the car, you can surrender the same and get rid of your auto loan obligations for sure and might be some other secured/unsecured loans too.
- Managing your realty assets
Just like a car, real estate in the United States is also categorized under depreciating asset. It might be a booming investment in developing countries but after the 2008 recession and home mortgage scam, real estate in the United States is a depreciating asset. Selling homes and acquiring homes both are a tedious task. Surrendering your home in case of bankruptcy is a good option to get rid of the home mortgage. In case of surrender, it is a good option to follow-up with your lender to close the transaction and initiate a title transfer to the earliest. This is important as there might be some dues like Real Estate taxes, HOA, etc., that may need to still be borne by you even after surrender as the lender was not able to transfer the property due to various reasons. Until the foreclosure has been done and the asset has been transferred, you still remain the on-paper owner of the property and are liable for those expenses.
The above listed 4 benefits are strong benefits to consider Chapter 7 bankruptcy California. Financial mismanagement and indecision are a part of life, but it is important to capitalize from the fresh start you can avail from Chapter 7 bankruptcy. To clarify and address all your questions on the benefits and to know more about bankruptcy reach out to +1 888-297-6203 right now!