As a resident of Indiana, there are a number of different options available to you if you feel like you need to file for bankruptcy. Each type comes with its own benefits and drawbacks. Today we’ll take a look at Chapter 7 bankruptcy and the types of debts that it can erase.
Chapter 7 bankruptcy is also known as liquidation bankruptcy due to the fact that in exchange for debt forgiveness, your assets may be liquidated. These are your nonexempt assets. They can include things like:
- Property that isn’t your main home
- Valuable artwork or collections
- Expensive clothing
For this reason, the United States Courts states that Chapter 7 bankruptcy does not require a plan of repayment like other types of bankruptcy, such as Chapter 13, do. The money will instead come from these items, rather than from a repayment plan.
In exchange for the liquidation of nonexempt assets, certain debts that you have will be wiped out. These are called unsecured debts, and are not tied to property like your car or home. Debts that can be wiped clean by Chapter 7 include medical bills, credit card debt, and gasoline card debt. However, there are some debts that cannot be wiped clean even by filing for bankruptcy. For example, student debts are exempt and must still be paid back.
Those who are considering filing for Chapter 7 bankruptcy should go into it understanding that it’s still not a cure-all for every debt you suffer from. However, to many people, it can be a step in the right direction.