Filing for bankruptcy is a step toward a fresh financial start. If you are considering Chapter 7 bankruptcy as the best fit for you, it can be helpful to know what kinds of debt this type of bankruptcy may cover.
Below are three common types of debt that creditors can discharge when you file for Chapter 7 bankruptcy.
Unexpected health problems and the subsequent medical procedures and treatment costs they require can leave your financial situation destitute. You might find yourself having to use up all your savings and then some to cover the cost of these types of expenses. But you are not alone. In fact, medical debt is the reason behind nearly 67% of bankruptcy cases. Fortunately, Chapter 7 bankruptcy forgives most medical debts.
Credit card debt
Using a credit card to make all your purchases can lead to a slippery slope. Credit card bills can accumulate quickly, and they can become overwhelming and sometimes impossible to pay off. If you can’t find a way to pay off these types of bills, filing for Chapter 7 can help discharge your credit card debts.
Divorce is a costly affair. As with credit card debt, the costs involved can quickly become unmanageable. You and your ex-spouse also may have accumulated shared debt during your marriage that you ended up receiving in the divorce. Luckily, Chapter 7 can cover these divorce-related debts.
Take note of debts that cannot be discharged
While Chapter 7 bankruptcy helps eliminate debts like the ones mentioned above, it’s also worth noting that there are some debts that filing for Chapter 7 cannot help you get rid of. These include student loans, mortgage debts and court fees like child support to name a few.
Knowing what debts bankruptcy can cover might help you decide whether Chapter 7 is right for your circumstances. Filing for bankruptcy is a life-changing decision. While it can be a stressful and complex process, doing so can set you on the path to peace and financial stability.