If you have used all your available credit and are still unable to pay for everyday expenses, you are far from alone. In fact, according to Prudential, almost half of Americans claim to be struggling financially, with roughly 40% expecting to spend years recovering.
Having too much debt can destroy your physical and mental health. Fortunately, with a Chapter 7 bankruptcy filing, you may be able to sell some of your assets to pay your creditors. Many of your remaining debts are likely dischargeable.
Debts that are typically not dischargeable
Even though you can likely do away with many of your outstanding debts, a Chapter 7 bankruptcy filing probably does not eliminate everything you owe. The following types of debts are usually not dischargeable during bankruptcy:
- Criminal debts, such as fines or restitution
- Student loans
- Child support
- Taxes
You typically are not able to discharge debts you incur after filing for bankruptcy protection. Consequently, once you file, it may be advisable not to assume any new debts until you have a better understanding of your post-bankruptcy finances.
The automatic stay
While some of your debts may not be dischargeable, there still may be a temporary advantage to seeking Chapter 7 bankruptcy protection. Specifically, when you file for bankruptcy, you benefit from an automatic stay. This stay prevents your creditors from trying to obtain payment from you while your bankruptcy case is active.
Ultimately, even though you may not be able to eliminate all your outstanding debt, doing away with dischargeable debts may give you the financial resources to pay your remaining balances.
