Chapter 7 bankruptcy is designed to help you regain your financial footing by digging you out of debt. Although claiming Chapter 7 bankruptcy may have some negative effects on your credit and make it difficult to obtain certain types of loans in the future, it can help by giving you the opportunity to start fresh. If you are struggling with medical debt, credit card debt, a mortgage and other overwhelming financial expenses in Tennessee or anywhere across the country, you are not alone. According to the U.S. Courts, more than one million people filed for bankruptcy in 2013. Of those million, 728,833 cases were for Chapter 7.
Otherwise referred to as liquidation bankruptcy, Chapter 7 has the ability to discharge certain types of debt, including medical expenses, car loans, mortgage, and credit card debt. This clears them completely off of your list of financial obligations. There are some debt balances, however, that may not be eligible for discharge, such as school loans or money owed to the government. Once you file for Chapter 7 bankruptcy, an automatic stay is put in place. This prohibits collection agencies and creditors from contacting you regarding your debt, and may stop wage garnishment as well.
In some cases, you may be able to keep your home or car by reaffirming the debt. This means that the financial institution will let you resign the loan and continue making payments on the property. Some financial institutions will work with you to lower the interest rate and the monthly payments on the loan.
This is general information only and is not intended to provide legal advice.