Bankruptcy is a way that can help people get out of debt that they won't be able to pay back. However, bankruptcy is often a bit confusing to people that are new to it, especially because of all the misconception and confusion with other forms. Here are some questions you likely have about using the Chapter 7 form of bankruptcy before you get underway with the legal process.
Can You Keep Your Major Assets?
Many people assume that they need to liquidate their home and car if they are using Chapter 7 bankruptcy. Thankfully, that is not always the case. There are exemptions for your major assets so that you can protect them. For example, it is common to keep one car for each licensed driver in the household. As long as you are not behind on your payments, you'll be able to keep your primary home and cars.
Things get complicated when you own multiple homes and more cars than household members. Those assets may end up being liquidated to pay for debts that you owe.
What Happens With Medical And Credit Card Debt?
The main reasons that people use bankruptcy to get out of debt is because of medical and credit card related debt. Thankfully, these debts are not secured with any type of assets, so it is very likely that you'll be able to discharge these debts. You won't have to worry about paying back the hospital hundreds of thousands of dollars, or paying down the credit card debt that keeps adding due to interest.
What Happens At Your Bankruptcy Hearing?
You'll need to attend a hearing regarding your bankruptcy in order for it to be approved. There are a few things that happen at this hearing that are crucial in order to have your bankruptcy finalized. All of your assets will be reviewed so it is clear that everything is accounted for, even those that won't be liquidated. All of your debts will be listed as well to be verified, which is crucial, since debts that are forgotten won't be able to be discharged later on. Your income is also verified to see if you still qualify for Chapter 7 bankruptcy, since an income that is too high could push you towards Chapter 13 bankruptcy to pay back some of the debts.
Work with your bankruptcy lawyer to help you out with the process and ensure it is done correctly.