Chapter 7 Bankruptcy

What Exactly is Chapter 7 Bankruptcy?

Bankruptcy. A word none of us ever want to hear in our lifetimes. Unfortunately, life happens, and sometimes declaring Chapter 7 Bankruptcy is necessary to keep your life afloat. Thankfully, Shamika at Shamika Saves is here to make sure your journey from bankruptcy to financial stability is nothing but smooth sailing.



In order to begin filing for Chapter 7 Bankruptcy, you need to get a basic understanding of what that actually means for you and your family. Chapter 7 stands out from other forms of bankruptcy in a few key ways. 

First, Chapter 7 Bankruptcy is less of a punishment and more of a last-minute lifesaver. If your debts are piling up to the point where it is difficult to pay for daily living expenses, Bankruptcy can help reset your finances for a new start. Unfortunately, this usually comes at the expense of some of your more valuable possessions. How this works is that over the course that it takes for your debts to be erased, a trustee that reviews your finances can sell your non-exempt property to the creditors you owe money to. The next key difference between Chapter 7 Bankruptcy and other forms of bankruptcy is the fact that it is meant to help support individuals with a low source of income. 

The debtor’s value is split into exempt and nonexempt properties in bankruptcy. The debtor must hold the properties excluded. The non-exempt properties become part of the condition of bankruptcy. The bankrupt estate is liquidated, and creditors collect the proceeds. Upon completion of the bankruptcy procedure, the debtor is generally relieved from personal responsibility for their liabilities. There can be income limits applicable to cases under Chapter 7. If the income of a debtor is too high, then Chapter 7 may not apply.

If applied properly, bankruptcy is an effective mechanism that can relieve a debt liable borrower that the debtor is unable to pay back. This offers the debtor the chance to start anew and create a fresh, more optimistic economic situation and a credit score. Bankruptcy can be a fast and reliable way to get you back on a responsible economic foundation.

Exempt Property

Here are some examples of exempt property that trustees affiliated with your Chapter 7 Bankruptcy case cannot sell to creditors:

  • Personal injury damages
  • Valuable jewelry
  • Pensions
  • Necessary clothing
  • Necessary furnishings and cooking supplies
  • Appliances
  • Cars and other motor vehicles
  • Public benefits

Non-Exempt Property

Here are some examples of non-exempt property that trustees affiliated with your Chapter 7 Bankruptcy case can sell to creditors:

  • Musical instruments
  • Heirlooms
  • Second homes or vehicles
  • Valuable item collections
  • Bank accounts
  • Bonds

Requirements for Filing Chapter 7 Bankruptcy

We already know that people who have a low source of income are eligible to file for Chapter 7 Bankruptcy. This means that the monthly income during the past six months must be less than the median for the average household of your size. However, there are a few other requirements that must be met, as well.

  • You must complete a credit counseling course within 180 days before filing.
  • You can not have filed bankruptcy in the past 14 years.
  • If you have attempted to file either a Chapter 7 or a Chapter 13 Bankruptcy in the past but was denied, a waiting period of 181 days must occur.

Filing for Bankruptcy

The process of filing for Chapter 7 Bankruptcy is a bit tedious and sometimes difficult to understand. Thankfully, Shamika Saves is here to help you understand the entire process and will be by your side during this difficult experience.

  • Attend counseling
    • These courses can take place online or over the phone. If you are looking for an accredited credit counseling course to take, contact Shamika Saves for more information!
  • File your forms
    • Within these forms, you will list everything needed to understand your current situation. Shamika Saves will be there to help guide you through this filing process to make sure you are as accurate as possible.
  • Send your documents to the trustee
    • These documents focus on verifying your identity and possessions. The trustee will then review these forms to determine whether you qualify.
  • Meet with the trustee and creditors
    • At this meeting, you will describe your current situation with your trustee. Depending on the situation, your creditors may or may not attend. However, Shamika Saves will be there to support your case if needed.
  • Attend budget counseling
    • This counseling is especially important not only because it will help you understand your future finances, but also because the certificate of completion is required by the court.
  • The discharge notice period
    • Within 60 to 75 days of your creditor meeting, the court will determine whether or not your debts will be discharged. 

Chapter 7 Bankruptcy’s Effect on Your Credit

Unfortunately, a Chapter 7 Bankruptcy does not exactly look great on your credit score. In fact, it’s pretty bad news; the bankruptcy will be on your credit for up to 10 years. The good news is that the majority of negative marks accumulated through Chapter 7 Bankruptcy will be gone from your credit score within seven years.

This is also where you can begin to take your life back. Through Shamika Saves I can help put you on the path towards Bankruptcy credit recovery. Over that seven-year period, you will make changes to your life and your financial plan that may take you from being unsure of how you can fix your credit to being in great credit standing. Reaching a 700 credit score is not impossible.

While this is not going to happen with every case there are times where Shamika Saves can have Chapter 7 bankruptcy removed from your credit report entirely. When you come to Shamika Saves she may look into your credit history and see if this option is possible or you.

Bankruptcy doesn’t need to ruin your life

What many fear when it comes to bankruptcy is that it is going to ruin their lives and they will never financially recover from this. When in reality bankruptcy is able to help you recover. Those debts that you felt were going to stay with you the rest of your life are in many ways cleared. 

One of the biggest misconceptions about bankruptcy is that you will no longer be able to receive a loan. This is not true. You can still receive mortgages, purchase cars, etc when you have a bankruptcy on your record. Many are able to do this while they are still going through the process of a bankruptcy court.

It is important to note however that you will likely have high-interest rates and need to be on your best behavior in making payments on time. Missed payments will have heavy consequences because of those high-interest rates.

What’s important though is that recovery after bankruptcy is not impossible. It is very doable and something that you can accomplish. Do not live for years trying to escape debt when there are options out there for a fresh start.

If you are unsure if bankruptcy is right for you then give me a call at Shamika Saves. I may be able to help you and give you guidance on if bankruptcy is the right decision for you.

What’s Next?

So, you have completed Chapter 7 Bankruptcy and have lived to tell the tale. Now is the time to utilize what you have learned in your counseling courses to good use. With your credit score not in the best of shapes and your debts completely discharged, it can be difficult to figure out what to do next. 

A good starting point is to check out Shamika’s helpful ebook 101 Powerful Tips for Legally Improving Your Credit Score. Here, she will explain some of the many repair secrets professionals use to improve their own credit scores powerfully and efficiently.

Want more information? Call 254-702-5426 to schedule an appointment with Shamika.