Could your debt qualify for discharge through bankruptcy?

| Jul 17, 2020 | Firm News |

Financial hardships can strike anyone at any time. Even if you or other Oregon residents consider yourselves good with money, a sudden emergency or unexpected event could leave your savings wiped out and leave you struggling to cover daily expenses, bills and other costs. Unfortunately, this type of scenario can often leave individuals feeling stressed and worried about their futures.

When parties are unable to cover their bills, they often accumulate a considerable amount of debt. You may have found yourself struggling to pay credit card bills, your mortgage payment and other expenses, and now, you believe you will not be able to get out from under these financial obligations on your own.

Discharge through bankruptcy

If you do not have a steady income due to job loss (which is often a contributing factor to financial issues) or you do not earn enough to cover your expenses, you may qualify for Chapter 7 bankruptcy. This type of bankruptcy is the most common, and it allows qualifying parties to receive a discharge of allowable debts when they complete the process. Of course, you may wonder what it means to have debt discharged.

A discharge of debt essentially means that your creditors can no longer pursue payment for that debt and that you no longer have an obligation to repay it. Credit card debt, medical bills and other unsecured debts are commonly dischargeable through Chapter 7.

Are all debts forgiven?

Though Chapter 7 could help you with much of your outstanding debt, it is important to remember that it may not completely wipe your slate clean. Some debts that you may still need to handle even after completing the Chapter 7 process include the following:

  • Certain taxes
  • Debt from a DUI charge
  • Court costs
  • Debts not listed on your bankruptcy documents
  • Child support and alimony
  • Fines or penalties resulting from criminal activity
  • Debts remaining from a previous bankruptcy

Even if you do have these forms of debt, bankruptcy may still benefit you if your forgivable debts, like credit card balances or medical bills, are substantial.

Is it right for you?

Determining whether bankruptcy could work for you is not always an easy choice. You may have many questions about the process and worry about how it could affect your credit and other aspects of your financial life. Fortunately, you could discuss your concerns and options with a knowledgeable attorney who could guide you through the decision-making process and help you understand what bankruptcy could do for you.