We all either know of someone or have heard about someone who had to file for bankruptcy at some point in our lives and if you had not before, you probably heard about them this year since 2020 has been the year of foreclosures, businesses permanently closing, and declaring bankruptcy. Now, when it comes to conversations around bankruptcy, you will hear people either talking about normal bankruptcy and, chapter 7 bankruptcy. Now, chapter 7 bankruptcy is different from declaring normal bankruptcy and it is a more extreme form of declaring bankruptcy.
By opting for chapter 7, you can end up getting yourself out of many debts since it will remove most debts when it goes into effect. However, certain conditions and criteria need to be met before you are eligible to file for this type of bankruptcy. There will be more paperwork required and you will have to fill in numerous details including your earnings, your spending, the amount of debt you are under, tax returns, and pay stubs, etc. It is advised to have a good bankruptcy attorney by your side here so that you can complete all of the paperwork correctly so that there is a higher likelihood of your bankruptcy declarations being approved.
While chapter 7 will remove a lot of different types of debts including credit card debts, medical debt, personal loans, and other “dischargeable debts”, but it will not remove tax debt, child support/alimony, and student loans. Filing for chapter 7 can prove to be more expensive with court fees and so on. Plus, chapter 7 will only protect you, and any co-signee to your loans will not be protected or covered here. Lastly, all luxury items will be taken and liquidated and then given to your creditors as compensation.