If you are considering bankruptcy as a way to regain hold of your finances, you are not alone. More than 796,000 people across the nation decided to file for divorce from June 2016 to June 2017. Of these filers, approximately 489,011 chose to file for Chapter 7 bankruptcy, or liquidation bankruptcy. As the most common type of bankruptcy, Chapter 7 has definite advantages and disadvantages when compared to other types of financial debt relief. Chapter 7 is designed to wipe out most of your debt, including medical expenses, credit card debt and other bills, and help you start fresh with a clean financial slate. Student loans, delinquent child support payments and money owed to the government cannot be eliminated in a chapter 7 bankruptcy.
In some cases, liquidation bankruptcy could mean that you lose certain items, such as your vehicle or home, during the course of the proceedings. The trustee who is assigned to the case will determine whether you have any valuable assets, property or items that are not protected. These items may be repossessed and sold for assets that will be distributed to creditors. You may be able to refinance your home or vehicle loan and not lose these items during bankrutpcy. Before this can occur, however, the trustee will determine whether you are eligible to file for Chapter 7. Once you qualify and have turned in your divorce paperwork, you will be asked to attend a creditors’ meeting and discuss your debt relief options to the court-appointed trustee.
This information should be used for educational purposes only and should not be taken as legal advice.