My wife and I made the decision to open a residential cleaning business. We needed enough money to get the equipment, do a bit of advertising and get the licensing and insurance to protect ourselves and our customers. For about two years, things went very well, but then, things took a terrible spin for the worst after we hired a few employees to help us with the workload. Since then, we have gone bankrupt and have gone back to working full time jobs. If you are struggling with your business and considering bankruptcy, this blog can give you some answers to the many questions that you have.
Are you considering filing bankruptcy to get rid of your debts and have a fresh start? If so, it's important for you to find out what debts Chapter 7 discharges before you file. If you owe money on debts that cannot be discharged through Chapter 7, filing for this branch of bankruptcy may not offer you any relief. Here are several things to know about the debts Chapter 7 will discharge.
Unsecured Debts
The main type of debts Chapter 7 discharges is unsecured debts. An unsecured debt is a bill you owe money for that does not have collateral. Credit card debts are the perfect example of this. A credit card does not have collateral, and you can typically discharge all credit card debt through Chapter 7.
Another example of an unsecured debt is medical bills. These types of bills also do not have collateral, and you can discharge them through Chapter 7. Any other type of unsecured debt may also be included in the debt you can discharge through this branch of bankruptcy. Personal loans are an example of this, but there are other things too, such as deficiencies on car repossessions.
Tax Debts
Despite what most people think, there are times when people use Chapter 7 to get rid of old tax debts. For this to occur, the tax debt must meet certain conditions. For example, it must be tax debt from at least three years ago. It must also be tax debt owed on a tax return you already filed. If you did not file a tax return, the debt may not qualify for a discharge through Chapter 7. A good bankruptcy lawyer can help you determine if your tax debt will qualify before you file for bankruptcy.
Loans
In addition, Chapter 7 can discharge debt owed on loans; however, you will not be able to keep the asset tied to the loan. For example, if you owe money on your car, you could get the loan amount discharged through the bankruptcy, but you would have to surrender the car. The same thing is true for your house or any other asset that you own.
When you meet with a bankruptcy law firm like Law Office of Barbara B. Braziel for a consultation visit, bring a list of all the debts you owe and the assets you own. By looking at this, the lawyer can help you determine if Chapter 7 is right for your situation.
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