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What is Chapter 7 bankruptcy and how can it help?

If you’re suffering from a financial situation that has made it difficult or impossible to pay your bills, you are probably looking at all options to get help. Fortunately, there are numerous ways for Oregon residents to find relief from insurmountable debt. One of these options is filing for bankruptcy.

The different types of bankruptcy are governed by certain rules and restrictions. If you’re considering bankruptcy, it is wise to understand the choices you have and how they can impact your financial future. This week, we’ll discuss Chapter 7 bankruptcy.

Out of the two main types of personal bankruptcy, Chapter 7 is also known as the "fresh start" option. People who successfully file for Chapter 7 are granted a complete discharge of most or all of their debts, says the Administrative Office of the U.S. Courts. Some assets with equity, including the family home, may be sold to repay creditors before the bankruptcy discharge takes effect; however, state laws vary as to which assets are exempt in a bankruptcy. It may be possible to keep your home and other property.

Some types of debt cannot be discharged through a Chapter 7 bankruptcy. These include:

  • Alimony and child support
  • Government student loans
  • Certain taxes
  • Debts for criminal restitution or personal injury or death resulting from driving while impaired

In today’s uncertain financial times, it’s not uncommon for people to suddenly find themselves unable to repay debts. If you are in this situation, you may be eligible for Chapter 7 bankruptcy, which can help you start over. It is important to remember that is general information and should not be taken as legal advice.

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