Should I file chapter 7 bankruptcy?


Before you file for Chapter 7 bankruptcy, you’ll want to decide if it makes financial sense. You can determine if Chapter 7 bankruptcy is right for you by asking yourself the following questions: Are you judgment proof—that is, are creditors legally barred from taking your property or income even if you don't file for Chapter 7 bankruptcy? Will Chapter 7 bankruptcy discharge enough of your debt to make it worth your while? Will you have to give up property you want to keep? Depending on your answers to these questions, you might find out that Chapter 7 bankruptcy won't help much or, in the alternative, that it is a good choice for you.


Caller: 10 years ago, I got a motorcycle accident. I didn't have health insurance so I paid down most of the medical on my credit cards. I've been paying on the credit cards for 10 years now. My FICO score is pretty good but I talked to an attorney, and he said I should file chapter seven. My question is, is this a good call from the attorney?

Attorney Tom Olsen: Let's talk to attorney Paul Urich about that. Paul, whenever you have a potential client come to you and think, "Hey, I might want to file chapter seven?" I'm sure you do an assessment, you do the math, you analyze it, and it must be pretty black and white. Usually, the answer is that whether chapter seven would make sense for a client or not.

Attorney Paul Urich: If you were coming to see me, I would look at your income and expenses to see how much disposable income you have to service the credit cards. If you're running at a deficit, even without the credit cards, then the chapter seven is the right thing to do at that point.