Debtors apply for bankruptcy upon the realization that they are unable to repay all or part of their outstanding debts. A debtor has a task to prove that their household income is less than the median income level in their state as with the case of Chapter 7 bankruptcy.
Filing for bankruptcy
There are several Chapters under which a debtor may file for bankruptcy with Chapter 7 being one of the most popular ones. Law Office of Davis & Jones, P.C. knows that debtors should consider hiring a Chapter 7 bankruptcy attorney in Salt Lake City to assist them in filing for bankruptcy. A bankruptcy lawyer provides a debtor with essential information regarding the grounds for filing for bankruptcy and possible ways of protecting some of their assets against liquidation.
Effect on your credit score
Declaring bankruptcy is often accompanied by some negative impact on the debtor’s credit score. However, its effect may be neutralized by the debtor’s will and intent to repay their outstanding debt. Usually, a court may provide a repayment schedule of up to five years within which a debtor is expected to have cleared their debts. Upon receiving such grants, a debtor should ensure their compliance with the provided payment plan.
Federal property exemptions
After filing for Chapter 7 bankruptcy, most of a debtor’s assets are liquidated with the sole aim of repaying the affected creditors. However, the Chapter allows for the debtor to retain some of their assets. A debtor may retain their motor vehicle if, upon valuation, it is determined to be worth less than $4,000. They may also retain their personal property such as pets, books, and musical instruments so long as no individual item costs more than $600. However, the total value of the personal items should not exceed $12,625.
Hiring an attorney remains to be the best solution when a debtor is filing for bankruptcy. Without a lawyer, a debtor is at risk of making an uninformed decision that can even lead to the foreclosure of their homes.