If you’re considering filing for bankruptcy, it’s probably the result of many agonizing months worrying about money and debts that feel unsurmountable. Bankruptcy is a position that no one wants to find themselves in and can leave you with complicated feelings. You know you want to take control of the situation but bankruptcy feels like a big step to take.
Truthfully, it is a big step. It may, however, be the best decision you make for you and your family. Before you begin you should know exactly what bankruptcy is and whether your debts are covered. This article covers the ins and outs of a Chapter 7 bankruptcy.
Chapter 7 covers most types of unsecured debt
Unsecured debt tends to be everyday forms of debt such as credit card balances, personal and payday loans and medical debt. Unsecured debts are termed as such because there’s nothing for the lender to reclaim from you in the event you can no longer make your payments.
Many people find that the interest rates alone on these debts can make it impossible to ever get down the actual balance itself.
What can you not include in a Chapter 7 bankruptcy?
Debts that cannot be discharged with a Chapter 7 bankruptcy include such things as student loans, unpaid child support and any recent tax obligations or other payments owed to the government.
If you make any large withdrawals from your credit card before filing for bankruptcy, a lender may refuse to allow this to form part of the bankruptcy itself. You’ll therefore still be liable for this debt. You should only file for bankruptcy if you feel comfortable that this is a solution that’s right for you and your financial situation. Taking some advice and seeking legal help as you go through the process can help it to go as smoothly as possible.