There comes a time in some people's lives where the debt that they have acquired is more than they can afford to repay on their current income. Financial problems can arise due to job loss, a long illness with substantial medical bills, or simply overspending and poor financial planning. If you are in a position of not having the means to repay your debts, and you have a number of creditors contacting you, filing bankruptcy may be a valid option. Individuals can typically file for either Chapter 7 bankruptcy or Chapter 13 bankruptcy. Continue reading to learn more about Chapter 7 bankruptcy.
What is Chapter 7 Bankruptcy?
Legally filing for Chapter 7 bankruptcy allows you to go to court to attend a hearing. Your financial records, including all of your debts as well as your assets, will be examined, and if you qualify for Chapter 7 bankruptcy a majority of your debts are discharged. When your debts are discharged, you will no longer be responsible for paying them, and your creditors will not be able to contact you in an attempt to collect payment.
What Debts are Eligible for Chapter 7 Bankruptcy?
If you are granted a Chapter 7 bankruptcy, the following types of debts will be legally discharged:
- Credit Card Debt
- Medical Bills
- Any Accounts Currently in Collection
- Any Past Due Amounts Due on a Lease Agreement
- Past Due Utility Bills
- Business Debts
There are several types of debts that cannot be discharged through Chapter 7 bankruptcy. These include: child support that is in arrears, the majority of student loans, and past due taxes from recent years. If the majority of your debt is tied to one of these things, filing for bankruptcy may not be the best solution for you.
Are You Eligible for Chapter 7 Bankruptcy?
Not everyone is eligible for Chapter 7 bankruptcy--the court will look at your current debts and well as your income and assets, and a bankruptcy means test will be used to determine whether or not you have the ability to repay your debts. If you do not qualify for Chapter 7 bankruptcy, you may be eligible for Chapter 13 bankruptcy. With Chapter 13 bankruptcy your debts are not discharged, and you will be required to pay a lump sum each month, which will then be distributed to your creditors. Chapter 7 bankruptcy is preferred since debts do not have to be repaid, but Chapter 13 bankruptcy can help you get back on track and fix your financial situation. Contact an attorney like Sever Law Office for more information.