Have you ever wondered, “If I declare bankruptcy, will all my debts just disappear?” This is a common question, and at Karen E. Evangelista, PC, we’ve helped many people in your situation. Below, we explain Chapter 7 bankruptcy, a type of bankruptcy that many people choose, and what it means for your debts.
First things first, let’s talk about what bankruptcy is. In simple words, bankruptcy is a legal way to start over when you can’t pay your bills. It doesn’t mean you’re a bad person; it just means you need some help getting back on your feet. But it’s not as easy as just saying, “I’m bankrupt!” There are steps to follow and rules to stick to.
One of these steps is called Chapter 7 bankruptcy. You might also hear it called “liquidation bankruptcy.” To file for Chapter 7, you need to pass a test. This test checks if your income is low enough. This is called the “means test.” If you pass this test, you can file for Chapter 7.
Now, onto the big question: does declaring Chapter 7 wipe out all debts? The answer is not all, but many.
Chapter 7 can wipe out debts like credit card debt, medical bills, and personal loans. For example, if you owe $5,000 in credit card debt and $3,000 in medical bills, filing for Chapter 7 could wipe these debts clean.
However, some debts usually can’t be wiped out. These include child support, most student loans, and certain tax debts. So, if you owe $20,000 in student loans, filing for Chapter 7 won’t make this debt go away. Everyone has different kinds of debt, which is why it’s important to make sure filing for a Chapter 7 bankruptcy is right for you. You will need to talk to your attorney about your own debts and whether they may be wiped out.
Filing for bankruptcy does have a big impact on your credit score. It can lower it and stay on your credit report for up to 10 years. This might make it harder to get a loan or credit card in the future. But don’t worry; this isn’t forever, and there are ways to rebuild your credit.
Bankruptcy is a big step, and it’s important to understand what it means before you decide to file. If you’re thinking about bankruptcy, it’s a good idea to talk to someone who knows about it.
That’s where our law firm comes in. As a skilled bankruptcy attorney, Karen E. Evangelista can answer your questions and guide you through the process. If you need help understanding bankruptcy, don’t hesitate to reach out to us for an appointment. We’re here to help you make the best decision for your situation.