Understand the Full Implications of Chapter 7 Bankruptcy

Bankruptcy represents a remarkable opportunity for many families. It benefits both their households and society in general by creating a way for people to start over and to build useful and productive lives for themselves after being hit by a financial disaster. Before you file, though, you should make sure that you understand the implications of your decision. Working with a lawyer who handles Chapter 7 Bankruptcy, you can go over your assets and liabilities and how such a filing is likely to accept them before you make any decisions that you can not reverse.

Chapter 7 is essentially what used to be called bankruptcy, before the law was changed to offer two different forms. It’s a legal mechanism where you can be help from the courts to offer up whatever excess assets you have remaining as full payment for most types of debt. This can allow you to walk away with your credit card debt completely eliminated, for example. Still, it is important to fully understand what kinds of assets and debts can be affected by this type of filing, and what is protected from it. That’s where a lawyer’s help becomes very important.

For example, it is almost guaranteed that you won’t be able to use Chapter 7 Bankruptcy to get any relief from student loan debt. There are exceptionally rare cases where people have gotten some relief from the courts, but those are incredibly uncommon and generally happen only after years of effort. It also won’t free you from mortgage debt, and other types of debt that are secured by personal property. You’ll have to give up the piece of property being used as security, or continue to pay the loan. On the other hand, accounts like retirement savings are generally protected from being part of what’s used to pay your creditors. The complexity of deciding what’s protected and what’s not is the reason it’s such a good idea to go over it all with an attorney so that you understand what you’re doing before you file.

Brent Sorenson & Associates, P.C. work with individuals and families who are suffering from severe financial hardships. They can help you to assess your situation and to make the right decision about whether bankruptcy is a good fit for you.
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