Making the decision to file for bankruptcy is incredibly difficult. It’s a financial position that no one would choose to be in and it can feel truly devastating. It’s important to recognize, however, that filing for bankruptcy can be the best choice you make for you and your family in taking control of your debt.
If you’ve been researching bankruptcy options, you’ll probably have come across the term “chapter 7 bankruptcy” and may be wondering if this is the right route for you to take. That largely depends on what type of debt you have and whether it is covered by chapter 7.
Chapter 7 is a liquidation bankruptcy
What this means is that it covers most types of unsecured debt. This can include credit card debt, personal loans, payday loans, old utility bills and medical bills which are often the main source of people’s money worries. The interest rates alone on these unsecured debts can make it almost impossible to ever pay off the balance you owe.
Some of the debts that cannot be discharged with a chapter 7 bankruptcy are student loans, child support, court fees and penalties, recent tax obligations owed and debts that are not included in the bankruptcy petition.
There are occasions where a creditor will also refuse debts being discharged. An example of this is when you’ve recently just purchased luxury goods or have taken a cash advance on a credit card. If these are not included in the bankruptcy, you may still be liable for making the monthly payments.
When filing for bankruptcy, you want to make sure that you’re protecting your right to keep your property and reach a solution that feels comfortable. Taking some advice and seeking legal guidance as you go through the process can help it to go as smoothly as possible.