What You Should Know About Chapter 7 Bankruptcy

The second most people hear the term bankruptcy, they immediately put their guard up. They believe that bankruptcy is not for them, and that they are somehow better than that. This common negative association with bankruptcy is largely unfounded, and unfortunately, many people do not understand the truth about bankruptcy. Get to know some of the important facts about chapter 7 bankruptcy, specifically, so that you can understand the truth (rather than the misconceptions) about filing for bankruptcy. 

Bankruptcy Does Not Equal Failure

When it comes to people's beliefs about bankruptcy, the first thought that always comes to mind is failure. You may think that if you file for bankruptcy, you will be admitting defeat. You feel that somehow you just couldn't properly manage your money, you let things get our of control, or you just couldn't hack it. 

However, this is not true. Many times, bankruptcy stems less from negligence or something you did wrong and more from unexpected and financially catastrophic circumstances. This could include a car accident that left you or a family member injured and with many medical bills, an unexpected illness, or the loss of income or a job. 

No matter what errors or mistakes you have made financially, or if you suffered one of these financially catastrophic situations, the key is to remember that bankruptcy is not failure. Rather it is admitting that you made errors or that circumstances were behind your control, and you need help to get things right again. Keep in mind that asking for help is not failure, but finding a solution to a problem. 

You Will Not Lose Everything

Another common misconception about bankruptcy is that if you file for bankruptcy all of your property and assets will be taken away from you. However, this is simply not true. In chapter 7 bankruptcy, eligible assets (including some possessions) are liquidated and used to pay off debts. But this does not mean all of your assets will be taken from you. 

The courts are not going to leave you completely destitute when your chapter 7 bankruptcy discharge is complete. You can discuss the precise assets you may be required to give up as a part of your discharge with your bankruptcy lawyer. Just keep in mind that there are several exceptions and workarounds that will help you to keep assets such as your home and your car that you need to function in your daily life. 

Now that you know more about chapter 7 bankruptcy, you know that considering filing for bankruptcy is not a failure and will not leave you with all of your assets liquidated. Bankruptcy can help you to start over when your debts have taken over your life and have become insurmountable. So, contact a bankruptcy attorney in your areas as soon as possible.