If you are struggling with significant debts, you may be wondering whether filing for bankruptcy could be the right choice for you. Generally speaking, as a private individual you have two options when it comes to filing for bankruptcy: Chapter 7 bankruptcy and Chapter 13 bankruptcy.
The following blog will focus on how Chapter 7 bankruptcy works, and what types of debts can be discharged through this process. It is important to note that there are many different options for addressing debts, and you should go through credit counseling before committing to bankruptcy.
Chapter 7 bankruptcy is referred to as liquidation bankruptcy
Chapter 7 bankruptcy involves the liquidation of some of your assets to pay off debts. Therefore, it may not be the best option for those who have significant assets such as a house.
Chapter 7 bankruptcy can be completed in several months
One of the most advantageous aspects of Chapter 7 bankruptcy is the fact that it can be completed in three or four months. This is in contrast to Chapter 13 bankruptcy, which may take between three and five years to complete.
You may not be able to have all debts discharged in a Chapter 7 bankruptcy
Many types of debts, from medical debts to credit card debts, can be discharged through Chapter 7 bankruptcy. However, you should be aware that certain types of debts cannot be solved through a bankruptcy proceeding.
Debts that cannot be discharged through a bankruptcy filing include debts owed due to back taxes or child support. The only way to pay off these debts is by gradually paying them through savings. Additionally, student debts are not discharged through bankruptcy proceedings.
If you have credit card debts, or owe money to private creditors, there is a good chance that you will be able to have your debts discharged by filing for Chapter 7 bankruptcy. Make sure that you learn more before making a commitment to this process.
