If you see no way of paying your debt, bankruptcy is a valuable tool. Many people choose to file Chapter 7, which liquidates assets. However, some bankruptcy myths may keep you from filing Chapter 7 in San Jose.
You Lose Everything
While Chapter 7 requires you to sell some property, laws help protect certain assets from bankruptcy. Exempt assets include things the court considers necessary for living, such as primary homes.
Nonexempt assets are things the court considers unnecessary for daily living, such as jewelry, watercraft, and valuable artwork. However, you may be able to save some nonexempt property by using federal or state exemptions.
You’ll Never Get Credit Again
Chapter 7 Bankruptcy may impact your credit for ten years, but it doesn’t stop you from getting credit. In fact, you may apply for credit or loans from lenders that accept applications not long after the discharge.
However, the interest rates will be higher, and some mortgage lenders require a waiting period before applying. Sometimes, it is better to work on improving your credit, but some lenders make exceptions in extenuating circumstances.
You Can’t Discharge Student Loans
It is commonly believed you can’t discharge student loans, but certain circumstances may allow you to discharge them. You must prove to the court paying the loan will cause you hardship and file an adversary proceeding.
An adversary proceeding is a separate case in which the court decides whether to deny or accept discharge. They often apply a tool called the Brunner test to determine if discharging the loan meets the qualifications of a hardship.
Hopefully, this clears up some myths about filing Chapter 7 in San Jose. If you think bankruptcy is the solution, contact Shulman Law Office today.
