Many people struggling with debt need some form of serious debt relief but may not know where to turn. Despite the fact that the option of filing for Chapter 7 bankruptcy to liquidate debt has been around for some time, there continues to exist a great deal of misinformation about what it takes to qualify for Chapter 7, how the process works, and what the effects of filing are. Not understanding bankruptcy, however, could prevent some people from taking advantage of the significant benefits of filing in some cases.
The U.S Bankruptcy Court for the Western District of New York has shown a drop of more than 23% in bankruptcy filings for February 2015, compared with the same month last year in 2014. This matches approximately the same level drop that occurred when comparing the numbers of filings in January 2015 with January 2014. One bankruptcy court judge wonders about the drop in filings, not necessarily believing it to be a good sign. He says that there may be many individuals who should be filing in order to get needed debt relief but are not filing for some reason. One bankruptcy attorney noted that many people erroneously believe filing for bankruptcy will result in the loss of the filer’s house and car, but many people who file for Chapter 7 are able to save these possessions. Overall, the number of bankruptcy filings has decreased nearly 20 percent since the beginning of the year in the Western district of New York, a district which is comprised of 17 counties.
Chapter 7 bankruptcy can be of enormous benefit to many people struggling under severe debt burdens. In addition to eliminating debt and providing consumers with a fresh financial start, there are also some immediate benefits to filing. Wage garnishments are stopped or prevented, bank accounts that have previously been frozen due to prior judgments become accessible again, and creditors are not longer permitted to contact consumers for payment.
Contrary to many people’s belief, filing for Chapter 7-which is also known as a debt liquidation bankruptcy-does not mean that the filer will certainly lose his or her are important to consumers, such as life insurance policies, retirement account, a vehicle, household goods, the home itself, etc. The first step in filing for Chapter 7 is determining whether or not one qualifies and then deciding whether Chapter 7 is the best strategy for relief given one’s particular circumstances.
Source: Buffalo Business First, “Local bankruptcy caseload continues to decline,” Allissa Kline, March 3, 2015