Bankruptcy is the process through which a person’s debts are reorganized. If the filer does not have many assets, his or her debts could be completely discharged. Chapter 7 bankruptcies can be a powerful tool to free oneself of debts and liabilities that are impacting his or her financial future. Residents of New Mexico and other states should be aware of the kinds of debt that are dischargeable in Chapter 7 bankruptcies.
Credit card debt
Credit card debt is one of the most commonly discharged debts in bankruptcy. When individuals face financial issues, it is easy to run up large credit card bills. Since credit cards can have high interest rates, it may be difficult to pay off the principal and interest of this debt. If you have a large amount of credit card debt, you should speak with an experienced bankruptcy attorney to see if bankruptcy is appropriate in your situation.
Medical debt
Individuals may rack up significant amounts of medical debt in a variety of circumstances. Sometimes, people need to borrow loans to pay for elective procedures that insurance does not cover. Other times, individuals may need to borrow money to pay for medical costs beyond the limits of their insurance coverage. In many instances, such debt can be wiped out in bankruptcy.
Personal loans
Individuals may borrow personal loans to pay for costs that arise before they receive their paychecks. Ordinarily, such debt is not secured by a home, a car or other assets. This type of debt can usually be canceled in bankruptcy, and because it is not usually secured by assets, this debt should not impact your property.
Student loans
In rare circumstances, student loans can be discharged in bankruptcy. Student loan creditors usually have protections against such discharges because student loans are not usually secured with collateral. However, if borrowers can show that they are experiencing a substantial hardship and cannot be expected to pay off student loans, this debt may be discharged in bankruptcy. You should consult an experienced bankruptcy attorney to determine if you can get rid of your student loans in bankruptcy.
