Understand The Limits and Possibilities of Chapter 7 Bankruptcy

by | Sep 11, 2014 | Attorneys, Lawyers and Law Firms

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Filing for Chapter 7 Bankruptcy is an excellent option for people who find themselves in dire financial circumstances. It’s often the only viable choice for someone who has been hit with a substantial amount of medical debt, and may be similarly necessary for people who are struggling due to having either lost their jobs or having a family business fail. Whatever the reasons that you are deeply into debt, you should understand both the potential and the limits that this legal path offers to you.

This approach to bankruptcy is the most thorough one, because it actually eliminates many of your debts entirely if you successfully file for it. The system does require that you give up whatever portion of your assets isn’t specifically protected by the law, but this is done in return for canceling what is usually a much more significant amount of value in debt. If you’re in a situation where it’s unrealistic to hope that you’ll ever be able to pay back what you owe, this is an avenue that makes it possible to get rid of a large proportion of it and start fresh on the process of building a strong financial foundation.

There are some problems, however, that you can’t expect to solve through Chapter 7 Bankruptcy. For example, it is almost never possible to be released from paying student loans through bankruptcy procedures. It’s also unlikely that you will be allowed to keep any assets that have liens against them for loans, such as a home or car, unless you can manage to continue keeping up with the payments. You also won’t be able to protect anyone who has cosigned on your loans. For example, if your parents cosigned on your car so that you could get a loan, the creditor can still go after them for everything that is owed.

Though there are a few drawbacks, filing for bankruptcy is a great option for people who are truly in dire financial circumstances. If you’ve found yourself far deeper in a hole of debt than you will ever be able to climb out of, you can contact Hitchcock & Associates, P.C. It is a federal debt relief agency that will help you to assess your situation more carefully and to determine what steps to take next.

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