Chapter 7 Bankruptcy: Getting Rid of Unsecured Debt and Moving Forward with Your Life
While you may be embarrassed to file for Chapter 7 bankruptcy, you shouldn't be. In 2014, there were 875,635 non commercial bankruptcies filed in the United States. While this number showed a decrease of 11% from the previous year, it is clear that Chapter 7 bankruptcy is still being used regularly by your average American. When you are struggling to pay your minimum payments and your debt continues to rise, Chapter 7 bankruptcy is probably for you. When you get rid of your unsecured debt through a bankruptcy, you will be able to move forward with your life and get back on financial track.
Debt That Isn't Wiped Out in a Bankruptcy
Some debts can't be wiped out when you file for bankruptcy, no matter how large they are. Student loan debt, alimony to a former spouse, and child support are all debts that won't be erased by filing for bankruptcy. You have a legal obligation to pay those debts, and you should work hard to pay as much as you can towards alimony, child support, and student loans throughout your bankruptcy proceedings.
Debt That Gets Erased
When you are overwhelmed with credit card debt, car payments, old utility bills, and a mortgage, you can get this debt erased through a bankruptcy filing. The problem for some people is that, if they ignore their car loan, the car gets taken away by the lender. If you want to keep your car, you must continue to make payments on your vehicle. If you own equity in your home, the bankruptcy trustee can sell your home in order to take care of the debt you owe. Look at your homestead exemption to see how much equity you truly have in your home. This is done by taking the total equity, and subtracting the homestead exemption from the amount. You may find that you have limited equity once the exemption is taken.
Myths Surrounding Declaring Bankruptcy
There are plenty of myths surrounding people who declare bankruptcy. The first is that one who declares bankruptcy is financially irresponsible. This is often not the case, as life events such as a death of a spouse or a divorce can make bankruptcy inevitable. Another important myth to dispel is the one that bankruptcy ruins your credit forever. In fact, once you file for bankruptcy, your credit rating begins to rise pretty quickly because you will no longer have late payments or credit overages being constantly recorded.
For more information about declaring bankruptcy, talk to an attorney like Thomas W. Bauer, Esq., C.P.A.