When faced with overwhelming debt, you may not know what to do. Unfortunately, for many Americans, debt is easy to get into and challenging to get out of.
Filing for bankruptcy can be an excellent way to eliminate debt. Before filing, you will want to understand what debts bankruptcy can and cannot relieve.
Here are the debts that Chapter 7 bankruptcy may eliminate:
- Medical debt
- Credit card debt
- Car payments
- Loan payments
In most cases, you will be able to keep your car and home if you file exemptions. You will have to create a repayment plan for any assets you keep. Creditors may repossess other property and non-essential items to help pay back the debt you owe.
Medical expenses are the leading cause of debt in the United States. A study found that 73% of Americans ranked financial problems as their leading cause of stress. Filing for bankruptcy may relieve stress and provide a fresh start for those struggling with debt.
What debts are not relieved by bankruptcy?
There are several debts that bankruptcy will not eliminate. Student loan debt is not impossible to discharge through bankruptcy, but it is tough to do so. In addition, debts that will not be relieved include:
- Alimony or child support
- Overdue taxes
- Debts from criminal acts
- Debts due to reckless action that caused injury to another person(s)
- Any debt incurred immediately before filing bankruptcy or any time after
Relieving any form of debt through bankruptcy may help you get your finances back on track. Choosing to file for bankruptcy is a significant life decision. It is best to speak with legal and financial counsel when making potentially life-changing decisions.