Filing for personal bankruptcy will give you the power to eliminate all your debts, except for some that are exempt. Whether or not your debts are dischargeable depends on the type of bankruptcy you file. Most personal bankruptcies filed under Chapter 7 are 'no-asset' bankruptcy filings. In these cases, the assets are sold and the money collected will go towards your debts. The court will discharge the remaining debt, but there are exceptions to the rules. Student loans, alimony, and some court judgements cannot be discharged.
Before filing personal bankruptcy, the debtor must take credit counseling. Individual or group counseling will be required, as well as an instructional course in personal financial management. The debtor must also have a monthly income that is not more than half of his or her current income. To calculate this amount, you need to subtract his or her social security income and certain other types of payments. When you file for personal bankruptcy, the trustee will release you from personal liability for the debts you have listed in your petition. Creditors will no longer be able to contact you.
Chapter 7 bankruptcies wipe clean all eligible unsecured debts, leaving you with more disposable income and more time to catch up on past-due payments. Chapter 13 bankruptcies leave you with a smaller total of debts, but they don't discharge your debt until the plan is complete. The remaining debt is then eliminated. Whether you choose a chapter 7 or a Chapter 13 bankruptcy depends on your individual situation. While most people file chapter 7 bankruptcies with no problems, some individuals find themselves stuck in a chapter 13 bankruptcy. Find more details concerning personal bankruptcy here.
Chapter 7 bankruptcy, meanwhile, is a way to obtain a court judgment that releases you from your debts, while allowing you to keep some of your assets. Non-exempt property will be sold to pay back the debt. Generally, Chapter 7 bankruptcy eliminates most debts, though there are a few exceptions. Some debts are not dischargeable under this type of bankruptcy, including alimony, child support, and certain kinds of unpaid taxes and student loans.
Chapter 7 bankruptcy is subject to a means test, a financial analysis of your income versus your essential expenses. People who earn more than the median income are unlikely to qualify for a Chapter 7 filing. However, if your debts exceed your income, you may qualify for Chapter 13. Check out this post for more details related to this article: https://en.wikipedia.org/wiki/Debt_management_plan.
