Chapter 7 bankruptcy is known as the liquidation bankruptcy because many of your assets are sold off to pay your debts. Even though this is a fairly common form of bankruptcy, there are still many myths that surround it.
One thing that you can’t believe is that all your debts will be discharged. Some, such as student loan and tax debt as well as child support arrears, usually aren’t able to be removed in a bankruptcy. You will still be responsible for all of these when your case is finished.
Another myth to avoid falling for is that you are a failure because you are filing for bankruptcy protection. Bankruptcy is a valuable tool for people who need the help. Filing your case is a sign that you are ready to take responsibility for your financial state. You can use this as a chance to make some changes. You will have to go through credit counseling and another education course before your case is discharged. Use the information you acquire as you rebuild your money matters for the future.
Finally, some people believe that you will lose everything if you file Chapter 7. It is true that you will have to part with many valuable assets since they will be liquidated to pay for some of your debts. There is a chance that you will be able to hang on to some of your property since there are exempt assets that the bankruptcy court won’t force you to hand over. If you want to keep more assets, you might need to file Chapter 13 bankruptcy instead.
There might be other factors to think about when you are trying to decide what to do about your debts. Make sure that you have experienced legal guidance.