If debts are piling up and you can no longer pay them, filing for bankruptcy may be your next course of action. Bankruptcy is a legal process for people who seek relief from some or all of their financial obligations. Here’s a guide to Chapter 7 bankruptcy, one of the most common ways to file.
What is Chapter 7 Bankruptcy?
Chapter 7, also known as liquidation bankruptcy, involves selling off your nonexempt property to pay back your creditors. Any owed sums your property liquidation doesn’t cover are discharged, meaning you no longer have to pay them.
Chapter 7, also known as liquidation bankruptcy, involves selling off your nonexempt property to pay back your creditors. Any owed sums your property liquidation doesn’t cover are discharged, meaning you no longer have to pay them.
What Debts Does Chapter 7 Cover?
Unsecured amounts such as credit cards, medical bills and personal loans are usually discharged, but there are several amounts you will still be expected to pay. These include student loans, child support, alimony, court fees, homeowner association fees, any personal injury debts accrued as a result of being intoxicated, and some tax debt.
Unsecured amounts such as credit cards, medical bills and personal loans are usually discharged, but there are several amounts you will still be expected to pay. These include student loans, child support, alimony, court fees, homeowner association fees, any personal injury debts accrued as a result of being intoxicated, and some tax debt.
Who Benefits from Chapter 7?
People who own very little or whose debts far exceed the value of their property will see the most significant benefit from Chapter 7 bankruptcy. This is because you are only liable to the extent of your non-exempt assets. While this may sound good, remember that this will stay on your credit report for the next 10 years. Filing for bankruptcy is a life-changing decision. Always discuss your situation with a lawyer as there may be alternative options open to you.
People who own very little or whose debts far exceed the value of their property will see the most significant benefit from Chapter 7 bankruptcy. This is because you are only liable to the extent of your non-exempt assets. While this may sound good, remember that this will stay on your credit report for the next 10 years. Filing for bankruptcy is a life-changing decision. Always discuss your situation with a lawyer as there may be alternative options open to you.
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