For many in Georgia and across the country, the cloud over the past few years seems to be lifting, and they are reclaiming their lives. Jobs are plentiful, and life is slowly returning to normal. However, not everyone is rebounding financially. Whether global events or personal setbacks have left you struggling to make ends meet, you might be ready to take the step of filing for bankruptcy. Maybe then, you, too, can return to normal.
While bankruptcy debt relief is a valid and legal way to escape from under the weight of overwhelming debt, you will want to take the time to carefully evaluate your situation before starting the process. Depending on the kinds of debt you are struggling with, bankruptcy might not be appropriate for your situation.
Do you owe these debts?
If you qualify for Chapter 7 bankruptcy, you probably understand that you might have to liquidate some of your assets at some point in the process. However, the benefits may outweigh the drawbacks because the end of the process often means the discharge, or elimination, of many of your unsecured debts. This might include medical debts, credit cards, utility bills and personal loans, in most cases. However, the following debts typically do not qualify for discharge during Chapter 7:
- Federal student loans
- Loans for vehicles you want to hold back from the bankruptcy liquidation process
- Your home mortgage if you plan to stay in the house after the bankruptcy
- Any debt related to a personal injury judgment, restitution following a conviction for financial crimes or debt related to a drunk driving conviction
- New credit card debt, meaning charges you make in the weeks or months just before you file for bankruptcy
- Backdated spousal or child support payments
- Any income tax or Social Security taxes plus penalties due to the government going back three years
In some cases, such as with student loans, you might qualify for a hardship to ease the burden of your debt, but this is not easy to obtain. As with most creditors, student loan providers will want to see a pattern of making a good faith effort to keep up with your payments before they will consider granting a hardship. Nevertheless, in many cases, the discharge of other burdensome debts through Chapter 7 offers enough relief that consumers are able to manage those few debts that cannot be discharged.