What happens to your debt in Chapter 7 bankruptcy?

by | Mar 17, 2017 | Bankruptcy

Are you overrun by overdue bills and statements? Do you receive phone calls and threatening letters from debt collectors? If you feel that you will never escape from the mounting pressure that comes from overwhelming debt, you need a way out, and you need it now. Fortunately, there is an option available to you.

Chapter 7 bankruptcy is an organized way by which you can confront your debt and obtain a financial future free of harassment from creditors and the stress of unpaid bills. However, many Texas residents eschew the possibility of filing for bankruptcy because there is a certain stigma associated with this choice.

Why should you choose bankruptcy?

There are negative connotations associated with Chapter 7 bankruptcy, but in reality, there are many benefits to making this choice. These positive benefits include:

  • Immediate cessation of creditor harassment
  • Organized way by which to deal with unsecured debt
  • Discharge of all eligible debts

Walking through the bankruptcy process is not always easy, so if you believe that this is the right choice for you, you would be wise to secure the assistance of an attorney who can effectively walk you through every required step.

The process of eliminating debts

Chapter 7 bankruptcy is also known as liquidation bankruptcy. In this process, you will list your eligible unsecured debts, such as medical debt. The sale of non-exempt assets pays off as much of this debt as possible. The bankruptcy court ultimately discharges the debt balances remaining.

While many assets could be sold to pay off debts in Chapter 7 bankruptcy, you will not lose the things that are most important to you. Bankruptcy will not force you to give up your retirement assets, your home or even your car. Before you begin the bankruptcy process, you can seek a complete understanding of which assets are exempt and how you can protect certain personal property.

Relief is possible through bankruptcy

Despite the many benefits that bankruptcy offers, many people struggling with overwhelming debt fail to see how this step can not only help them deal with their debt, but allow them to have a strong financial future. If you cannot pay your medical bills, credit card debt or other balances, it is always worthwhile to explore the legal options that may be available to you. With experienced and knowledgeable guidance, you can find your way out from under the mountain of debt currently overwhelming your life.