Advantages of Chapter 7
If you feel that you are not going to be able to pay your bills, chapter 7 bankruptcy may be an option.
Chapter 7 bankruptcy allows people who are under a certain income limit to be able to discharge their personal loans, medical bills, credit cards, income tax and personal property taxes that are over 3 years old. If you’re below the median income for your size family, then chapter 7 may be an option.
There are also many exemptions for your assets so you do not have to lose any of your assets even though you are discharging your debts. For example, if you own a home, each person who owns it is entitled to $75,000 homestead exemption, so if 2 people own the home, you can have up to $150,000 of equity in your home and they cannot touch your home. There are also exemptions for pension plans, 401k’s, IRA’s. Creditors cannot get any of those assets and you can still discharge your debts. There is also exemptions for cars. If you don’t own your home then there is a wildcard exemption that can be used up to a certain amount for any asset.
