Learn How Filing Chapter 7 will Eliminate Unsecured Debt

You may have experienced a series of events that has caused your credit card bills to pile up mercilessly. Or a medical issue created a mountain of bills that you're having troubles paying. It doesn't matter why or how you've gotten to this point. There are times in life when things get beyond our ability to handle them. It's at this point when you should consider filing chapter 7 to eliminate your unsecured debts.

Why Chapter 7 for Unsecured Debt

Revolving accounts and medical bills can get out of hand very fast. They can balloon quickly, making it that much more difficult for you to pay. One of the requirements for filing chapter 7 is to have debts that leave you with no excess money at the end of each month. You can still qualify for 7 even if you're over the median income as long as you can prove that you've got little left over after paying all bills. Chapter 13 is reserved for those who have enough money to distribute to creditors every month.

How It Eliminates Debt

Unsecured debts have no assets for securing the balance, making it easier to get rid of it entirely. Bankruptcy itself is nothing to be taken lightly, but it provides an out for the petitioner whose financial life is out of control. The process from start to finish takes about four months. Provided the trustee agrees that everything you've stated is true, they will discharge all of your balances and prevent the creditors from ever seeking you out for the rest of your life.

Isn't Chapter 7 Supposed to be About Liquidation?

It's a fact that chapter 7 is also known as liquidation. A petitioner with little to no salable assets will be classified as a no-asset bankruptcy, meaning that there's no giving up of necessary possessions. In the case that you have assets with outstanding balances on them, such as a car note, you can do what's called reaffirming the loan. It's also possible that your lawyer can renegotiate the loan with the creditor to obtain a more favorable interest rate and payment. The finance company would rather have the money than the vehicle.

Talk to an Attorney

Before you go forward into filing chapter 7, have a consultation with an attorney. It's wisest to go forward with advice and information from a reliable source, one who's seen situations like yours before. You'll come away with a better sense of the whys and hows about filing a petition for your situation.