Bankruptcy is the only solution for debts that people cannot manage. Job losses, medical emergencies and many other unexpected life events can quickly empty bank accounts and restrict options. Once a credit score falls below a certain number the debtor cannot qualify for consolidation loans or refinance current loans. Chapter 7 filers have an opportunity to erase mistakes and bad luck and start again for a better future.
Stop Collections Instantly
The collection phone calls, vehicle repossession, and home foreclosures all stop once someone files for Chapter 7 protection. Collection companies and creditors cannot legally contact the client other than to state that they received notification of the filing. For many people, the relief of being able to answer their phone without fear makes the process worthwhile.
Keep Many Assets
A home with up to $40,000 in equity, personal clothing, and a vehicle with $2,500 in equity are examples of the items exempt from bankruptcy proceedings. These items are per individual, so couples can keep property twice as much equity and have double the amounts of personal belongings. Of course, everyone must pay the debt on any property with a lien to keep ownership.
Negotiate New Plans
Chapter 7 in Tacoma Wa enables people to work with the companies that hold their home and auto loans. They can arrange to catch up on the loans and sign reaffirmations that show their intent to pay the debt. The effort allows people to keep property they want if they have an income high enough to cover the debt.
Erase Unsecured Debt
A Chapter 7 filing erases unsecured debt like credit cards and hospital bills as well as some tax debt. It is not possible to use this method to reduce or eliminate child support payments, current tax debt, and student loans.
The process for a Chapter 7 in Tacoma Wa typically takes a few months. Filers must meet the income guidelines to qualify and must provide the bankruptcy court with a complete record of all debts. Most filers see a small dip in their credit score after the credit monitoring companies receive a notice of the discharge. The scores rise quickly for those that make careful financial decisions after they file and continue to make all payments on time.