Filing Chapter 7 Bankruptcy: Evaluating Debt

Filing Chapter 7 bankruptcy can help you minimize unsecured debts and get back to financial comfort. Dealing with the headache caused by monthly debt payments you cannot afford can be consuming. It can gnaw at you and make life less enjoyable. Many individuals use bankruptcy to get their life back on track after an unexpected setback such as being laid off or being hospitalized due to an injury or illness. Whatever the reason for your mounting debt, you may want to consult with an experienced bankruptcy attorney to find out whether you qualify to file for Chapter 7 bankruptcy.

Evaluating Your Debt

The first part of the bankruptcy process involves evaluating your debt situation to understand better what type of bankruptcy, if any, is right for you. The kind of debt and amount of debt you have will help determine what kind of bankruptcy you should file or if other options are available to you. For example, if most of your debt is from college loans and unpaid tax debt, you will not likely find relief through bankruptcy. These kinds of debts are generally not removed by bankruptcy.

You may be wondering what kinds of debts are eligible for relief in bankruptcy. The largest class of debts relieved in Chapter 7 is unsecured debts. Unsecured debts are debts which are not secured by any property (such as real estate or a vehicle). Credit card debt is usually discharged during a Chapter 7 filing. There may be some restrictions on credit card debt if it is incurred for recent vacations or travel or other excessive luxury spending that is recent and might be considered as used in contemplation of bankruptcy.

Other debts that are often removed through Chapter 7 include medical debts, some personal loans that are not secured by property, payday loans and past due utility bills. To find out which of your debts can be claimed in a Chapter 7 bankruptcy, talk with an experienced bankruptcy attorney. Evaluating your debt situation is a smart first step in a new financial direction.

Getting Legal Help

An experienced bankruptcy attorney is in the best position to help you assess your debt situation. Deciding to file Chapter 7 bankruptcy is an important decision that should be handled with professional help. An attorney will be able to tell you exactly which debts and assets will likely be included in your bankruptcy estate.