KUFFEL, HULTGRENN,
KLASHKE, SHEA & ELLERD, LLP Attorneys at Law
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When you started taking on debt, the idea was that having a rotating credit line would help your credit score. You spent money and paid it off the following month. Sometimes, you'd let a small balance remain.

Over time, that small balance began to grow as life's little hiccups occurred. Now, you have thousands in debt and are struggling to pay the bills. What's worse is that your job has been cutting hours, and you're not sure you'll be able to pay any of your debts this month.

Should you consider Chapter 7 bankruptcy?

Chapter 7 bankruptcy can be a great way to eliminate your debts if you're in a position where there are no other acceptable options. You should know that Chapter 7 bankruptcy is liquidation bankruptcy. That means that some assets may need to be sold to pay back some of the debts you owe. However, there are many exemptions, so there's a chance that you won't need to give up anything at all.

You may want to consider bankruptcy if you've already:

  • Tried negotiating with your creditors
  • Sold off items to try to pay down your debts
  • Made an effort to discuss your financial issues with the creditor with no positive results
  • Have more debt than is reasonable to pay off in your financial circumstances

Everyone goes through hard times in their lives, so having to cope with the loss of a job or reduction in hours isn't something unusual. However, everyone is affected by those changes differently.

What are some debts that won't be discharged in bankruptcy?

Some of the debts that won't be discharged in most Chapter 7 bankruptcies include:

  • Debts for certain taxes
  • Debts for child support
  • Alimony debts
  • Criminal restitution order debts
  • Debts for malicious or willful injury to another person or property
  • Debts for some educational loans or educational benefits made by the government

It's still worth discussing those debts with your attorney, because there may be ways to defer the payments or to work out solutions with the government or other creditor.

Choosing bankruptcy is an important decision. Your credit will be negatively impacted, and you may find that a bankruptcy won't eliminate the majority of your debts if they're secured. Discuss your options with your attorney before you choose bankruptcy, so that you know you've exhausted all other avenues. Bankruptcy is a wonderful tool, but it needs to be used in the right circumstances.

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