Chapter 7 Basics

Chapter 7 is sometimes called “straight bankruptcy”. Under Chapter 7, the Court will discharge (wipe out) many of your debts. Credit card debt, medical bills, and unsecured loans are typically discharged. Debts that have collateral, such as a car loan or a home mortgage, must be reaffirmed in order to protect the collateral. A reaffirmation is an agreement that the debt will not be discharged. Some debts, such as taxes, student loans, and divorce or child support obligations cannot be discharged in Chapter 7. Chapter 7 may be a good choice if you have unsecured debt that you cannot pay and have few secured debts. However, many factors must be considered before deciding whether bankruptcy is necessary and, if so, what type of case to file. To learn more about Chapter 7, click HERE.

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