Sudden hardships like medical emergencies, home or car troubles, or unexpected job losses can become a significant burden on a person or household. Given the severity of the hardship, a person may need to look towards more serious solutions to their problems, and bankruptcy may be the answer they are looking for.
Bankruptcy is more common than you may expect, and more than 700,000 individuals have benefitted from these legal proceedings. Bankruptcy may be what you need to take back control of your finances, but a few questions need answers first.
Will I lose everything in Chapter 7 bankruptcy?
No. Chapter 7 bankruptcy is a form of bankruptcy that involves selling off any nonessential assets and applying that income to the debt before bankruptcy discharges the remaining unsecured debt. Applicants will need to sell nonessential things like collectibles, heirlooms, and secondary homes or cars, but they can often keep the essential assets like a primary home or car.
Can I amass a bunch of debt before filing for bankruptcy?
No. Only the debt that you naturally accrued with be eligible for discharge. Attempting to spend additional funds before the discharge may qualify as fraud, which can cause you to experience more problems than you started with.
Does bankruptcy eliminate all debt?
No. Chapter 7 bankruptcy only eliminates unsecured debts or debts without collateral, like credit card debt, medical debt, or utility bill debt. Secured debt like mortgages or car loans is not affected by this bankruptcy. Chapter 13 bankruptcy restructures your unsecured debt into a single monthly payment over a three to five-year plan. After the debtor makes all their monthly payments, the remaining obligation is then discharged.
Where can I learn more about bankruptcy?
Consult with a bankruptcy attorney. Experienced lawyers know how to help you decide if bankruptcy is right for you, determine which option protects your best interests, and they can help you file for bankruptcy in a timely manner as well.