Many people understand the benefits of bankruptcy, however, they neglect to learn more as they are concerned about the negative impact it will have on their life. More specifically, they're concerned about what type of debt will be discharged and if they'll lose any of their assets.
This leads to an important question: What impact does bankruptcy have on unsecured debt?
There are many types of unsecured debt, with some of the most common including medical bills and credit cards.
While not always the case, Chapter 7 bankruptcy typically allows you to discharge unsecured debt. With this, once the process comes to an end, you no longer owe the money.
With Chapter 13, however, you may have to pay back some or all of your unsecured debt through a repayment plan.
Note: Many people believe that student loans, alimony, child support and taxes can be discharged through bankruptcy. This is not the case. This debt will not be impacted, regardless of the type of bankruptcy you file. Instead, you will still owe the money in the future.
It's important to understand the impact of bankruptcy on your life as a whole, as well as each individual type of debt. For example, you should be 100 percent clear as to what will happen to unsecured debt if you decide to file.
There are many pros and cons associated with bankruptcy. For example, you may like the fact that you can clear unsecured debt as a way to move on with your life. If this sounds like something that could improve your situation, it's probably time to learn more.
Source: FindLaw, "Bankruptcy: Frequently Asked Questions," accessed April 24, 2017