Chapter 7 bankruptcy is one kind of bankruptcy you can choose if you are struggling to pay your bills and are overwhelmed with debts. Chapter 7 bankruptcy isn’t the only option, but it is the type of bankruptcy most people think of when they consider entering into bankruptcy.
Known as liquidation bankruptcy, Chapter 7 requires you to sell assets to pay back debts. Once everything that can be sold is sold, any additional debts are discharged. There are, of course, some debts you cannot eliminate this way, such as student loans or federal taxes. To deal with those debts, you may need to speak with your attorney about alternatives such as negotiating or applying for specialty assistance.
The good news about Chapter 7 bankruptcy is that there are many exemptions. Some exemptions allow you to keep things such as your primary vehicle, necessary clothing and even your home. You’ll need to speak with your attorney about your assets and then work to determine which of those assets you’ll be able to exclude from the bankruptcy based on current state laws.
What should I do if I can’t make payments on my debts?
Don’t delay in speaking with professionals who can help. Bankruptcy may be the last effort to get out of debt, but there are other options to consider first. With the right education and support, it’s easier to determine what you should do to help yourself get out of debt and how you’ll stay out of debt after you have your debts discharged or eliminated through other means.