If you are looking at bankruptcy options, one of the most commonly used and fastest ways is to file for Chapter 7bankruptcy. It is the bankruptcy provision that most individuals in the United States use. Anyone facing bankruptcy is allowed to apply for it. It involves the liquidation of an individual’s assets to pay off creditors. It may sound like the last thing one would like to do when they are broke, but Chapter 7 bankruptcy is a way to wipe off all debts and start afresh.
How does Chapter 7 bankruptcy affect my future credit?
It is very important for you to know, before you decide to apply for Chapter 7 bankruptcy that it appears on your credit report for 10 years. This means that although you may pay off all that you owe, banks and other financial institutions may not lend you money because they can see that you applied and were granted Chapter 7 bankruptcy.
Who can apply for Chapter 7 bankruptcy?
As mentioned, this kind of bankruptcy is best suited for individuals. Apply for Chapter 7 bankruptcy if:
What is the means test?
When filing for Chapter 7 bankruptcy, the means test is a requirement. It is basically a way to determine whether really you are not able to pay your debt. It is done by qualified assessors provided by the state. It will take your average income and compare it to the average income in your state. If it is higher than the average, they will compile your basic expenses and then deduct them from your income to see if what is left over is enough to deal with your debt. If it’s not, you can go ahead and file.
Remember that filing for Chapter 7 bankruptcy is actually a way for you to start afresh. Work on improving your credit rating and lenders will be willing to make exemptions for you in the future.