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3 things to consider before filing for Chapter 7

Many Harrisburg area residents who are contemplating Chapter 7 bankruptcy find the idea of a clean debt slate alluring. They can no longer deal with the harassing phone calls, endless bills and wage garnishments that have become a part of their daily lives. A fresh start is often the reset that they need to regain their financial footing and control of their lives. 

As desirable as Chapter 7 bankruptcy may seem, it is not an ideal solution for everyone. This option is best for people who find themselves with limited financial resources and unsecured debts. Those who have modest incomes and a means to repay their debts over several years may find Chapter 13 bankruptcy a more beneficial solution. Regardless of the type of bankruptcy filing one pursues, it is not a quick panacea. Here are a few considerations all potential Chapter 7 filers should consider. 

All debts are not eligible 

The main purpose of Chapter 7 is to erase certain unsecured debts, such as medical bills, delinquent credit cards and personal loans. Debts that involve real property, also known as secured debts (mortgages, tax liens, child support, alimony, student loans and vehicle loans), are not dischargeable. 

Creditors can dispute the filing 

Discharge is not automatic. Before the courts issue a ruling, the law allows for creditors to file an objection to the filing. If the creditor can prove that purchases happened within a specific time frame leading up to the filing date, the courts can deny the petitioner's filing based on the failure to act in good faith. 

Full transparency and disclosure are necessary 

Before filing for Chapter 7 or any type of bankruptcy, a careful examination of all assets, income and finances is necessary. Petitioners must provide full disclosure to the courts about their financial circumstances. Mistakes, omissions and failure to meet deadlines can all lead to denials. Deliberately misleading the courts can also lead to fraud charges and other unfavorable consequences. 

Bankruptcy is a valuable solution. To reap the most benefits, it is important to exercise due diligence and consider legal and professional assistance.

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