How To Deal With Debts Chapter 7 Does Not Include

If you owe a lot of money on your credit cards, Chapter 7 bankruptcy can help you wipe these out. This is a common reason people file for bankruptcy; however, there are certain debts that cannot be included in a Chapter 7 case. Depending on your situation, filing for bankruptcy might still be a good idea, but you may need to seek help to find a way to get caught up on the debts that will still remain after you file. Here are two things to know about this situation.

The debts that will remain

Chapter 7 bankruptcy is ideal for a person that owes a lot of money for unsecured debts, such as credit cards and medical bills. It may not help for any debts that are secured debts, though, and this includes your mortgage and car payments. There are also more kinds of debts you cannot include in your Chapter 7 case, including

  • child support,
  • alimony,
  • taxes owed to the IRS,
  • student loans, and
  • court-ordered debts.

What you can do about these debts

The first thing to realize is that after you file for Chapter 7, your monthly expenses might decrease right away. For example, if you were paying $700 a month towards your unsecured debts, you will no longer have these payments to make. This might free up some of the cash you have, and this could make it easier for you to make the other payments you will still have to pay.

In addition, there might be steps you can take to reduce or modify the other debts you have. If you are behind on child support or alimony payments, you could go to court and ask the judge to allow you to pay a little extra per week to help you get caught up. This might be an easier way to do this rather than having to pay the full amount you are currently behind on.

If you are behind on your student loan payments, you could always call your lender to make other payment arrangements. Many lenders are willing to do this if a borrower can prove he or she is going through a financial hardship in life.

For money owed to the IRS, you may want to talk to a tax attorney. Tax attorneys can often help with situations like this by getting the tax debt reduced or by working out an affordable payment arrangement.

Once you file bankruptcy, you may find relief from some of your debts, but there is a chance you will still have work to do to get caught up on your other debts. If you would like to learn how bankruptcy can help you, contact a bankruptcy attorney today.