One question you should ask a bankruptcy attorney before filing is whether Chapter 7 will eliminate all your debts. The answer is probably no, but it might eliminate the majority of your debts. It all depends on your situation and the debts that you owe. You can learn more about this by meeting with an attorney, and here are the top things the attorney will likely tell you as they answer this question for you.
The Sole Purpose of Chapter 7 Bankruptcy
You might want to begin researching bankruptcy options to learn more about them. As you do this, you will learn that Chapter 7 is the branch that helps you quickly eliminate your debts. It does not generally eliminate every debt, though, but it serves a key purpose. The main purpose of a Chapter 7 case is to help someone have a fresh start within months. Getting a fresh start with your finances is a great way to regain control of them. Chapter 7 offers a fast approach to this, and it often gives a person the relief they need the most.
Chapter 7 Eliminates Most Unsecured Debts
Chapter 7 provides a fresh start by offering debt forgiveness on most unsecured debts. The most common unsecured debt you might have is a credit card bill. Filing for this branch may offer 100% forgiveness on all your credit card balances. You might also receive forgiveness for any medical bills you owe and for personal loan balances. You can ask your lawyer about other debts that might fall into this category.
Chapter 7 Does Not Eliminate Priority and Most Secured Debts
Chapter 7 has some limits, though, and one limit involves secured debts. For example, do you have a house with a mortgage on it? If so, you cannot expect the court to forgive your mortgage balance if you want to keep your house. The same is true for car loans. Chapter 7 also will not eliminate priority debts, such as child support, alimony, student loans, and back taxes.
The best thing to do is to find out what debts Chapter 7 will eliminate if you file for this branch of bankruptcy. You should aim to find this out before you file, as you can use this information to determine if you should use Chapter 7 bankruptcy. Talk to a bankruptcy attorney to learn more about your options and the effects of each option.