Chapter 7 bankruptcy is a process in which a court wipes away most types of unsecured debt. Choosing to file for this can offer a much-needed lifeline to those struggling with the pressures of unmanageable payments. But as helpful as it is, many people don’t fully understand what it is and the processes involved. To illuminate the issue, below are answers to some of the more frequently asked questions on the topic.

Understanding Chapter 7 Bankruptcy

Can All Unsecured Debt Be Eliminated in Chapter 7?

While most unsecured debts — such as credit card balances, past-due utilities, and back rent — will be wiped out by this filing, there are a few notable exceptions. Student loan debt, for example, cannot be discharged by Chapter 7. Also, if you owe money to the IRS or are late in paying your child support, this type of bankruptcy will not make the obligations disappear.

How Long Does Bankruptcy Take?

Every bankruptcy is different, and how long the process takes will depend largely on how complicated your financial situation is. Some take years to resolve, but this is not the norm. In most straightforward circumstances, all debts are discharged, and the case is formally closed within six months of filing.

Can I Make Big Purchases on My Credit Cards If I'm Filing?

Doing so is never a good idea. While it may be tempting to splurge on a big-ticket item because you think you won't have to pay for it, your plan could come back to bite you. The bankruptcy courts will look over your purchases in the months preceding your filing, and any high-dollar items are going to throw up a red flag. Remember: a bankruptcy court can deny your petition just as easily as they can approve it. Don't give them a reason to dismiss you.

I've Been Served With a Foreclosure Notice; Can Bankruptcy Help?

Bankruptcy will initiate an automatic temporary stay on your foreclosure. This gives you some extra time to come up with a plan for either keeping your home or selling it as part of your asset liquidation. Work closely with your attorney, so you know and understand all your options in such a situation.

If you are considering bankruptcy, trust attorney Allyson Pearce of Pearce Law Firm. For over 15 years, she has been successfully representing Foley, AL, residents in such financial matters. She will provide you with the personalized guidance you need to end your debt and reclaim your life. Call today at (251) 368-2992 or visit her firm online to schedule a free consultation.