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Filing for bankruptcy can help struggling borrowers get their feet back onto solid financial ground. Depending on the type of bankruptcy you file, this powerful tool can completely eliminate some debts and even prevent bankruptcy. However, there are some important limitations you should know about before deciding whether to file for bankruptcy.

What Bankruptcy Can Do

Chapter 7

A Chapter 7 filing can completely discharge most unsecured debts, including credit cards, medical bills, and store charge accounts. Most lawsuit judgments are also eligible for discharge, as well as lines of credit and most other consumer debts.

Filing for bankruptcy also triggers an automatic stay, putting an immediate stop to all harassing calls, wage garnishments, and all other collections activity.

Chapter 13

filing for bankruptcyA Chapter 13 bankruptcy offers an affordable repayment plan. This helps borrowers make up missed payments on secured debts, allowing them to keep their home or car. Like Chapter 7, it also eliminates most unsecured debt and triggers the automatic stay.

What Bankruptcy Can’t Do

Chapter 7

While Chapter 7 wipes out most unsecured debt, some are ineligible for discharge. Student loans, child support, and judgments related to DUI charges, in particular, can’t be discharged in a Chapter 7 bankruptcy.

Filing a Chapter 7 also won’t prevent foreclosure or repossession, although the automatic stay can give you the time to work out an arrangement with your lender.

Chapter 13

Filing for Chapter 13 protection won’t allow you to keep secured assets if you can’t afford the loan payments. To qualify for a Chapter 13, you must be able to show that you have enough income to cover your bankruptcy payments while keeping up with your current obligations. Otherwise, your petition will likely be denied and the lender will be allowed to repossess the secured assets.


 

If you’re struggling with debts you can’t repay, the attorneys at Greene Law, PC are committed to helping you get a second chance at life. This Farmington, CT-based law firm is committed to giving you the attention you deserve. They deliver a level of service that has earned them recognition as one of Hartford’s Finest of 2019. Visit their website to learn more about filing for bankruptcy and call (860) 676-1336 to schedule your initial consultation.

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