Losing your job can present you with huge financial difficulties. If you already have debts before losing your job, this lack of income could lead to your financial situation spiraling out of control. This is why so many debtors who have recently lost their job consider filing for bankruptcy.
However, many people wrongly believe that they cannot file for bankruptcy if they don’t have an income. There are different bankruptcy Chapters that provide solutions for debtors in many different situations. Chapter 7 in particular is suited for debtors with a very low income or no income at all. The following is an overview of Chapter 7 bankruptcy and why it can be beneficial to those who have lost their job.
What is Chapter 7 bankruptcy?
Chapter 7 bankruptcy is a type of bankruptcy that uses the liquidation of assets to pay off debts. In contrast to Chapter 13 bankruptcy, which uses a person’s steady income to pay off their debts over time, Chapter 7 bankruptcy does not require that the debtor has any income at all. In fact, Chapter 7 bankruptcy may be unavailable to you if you have a high income.
What are the main advantages of Chapter 7 bankruptcy?
Chapter 7 bankruptcy is considered to be advantageous for several reasons. Many people want to file for this Chapter because it takes a matter of months to complete, meaning that a debtor could have a fresh financial start in a short amount of time. Chapter 13 bankruptcy, in comparison, can take three to five years. Additionally, Chapter 7 bankruptcy uses some of your assets to liquidate, but if they are not enough to pay off all debts, debtors will likely benefit from a debt discharge.
If you are dealing with the loss of your job as well as facing quickly accumulating debts, you should take action to find out which bankruptcy Chapter could offer you a fresh financial start.