Your Legal Rights at Work

Getting To Know Chapter 7 Bankruptcy: Common Faqs

by Lewis Hamilton

Debt overload can be stressful, especially if you are not earning enough to make all your payments in a timely manner. Working with bankruptcy attorneys to file for chapter 7 bankruptcy can be a necessary move. Take a look at some questions individuals tend to have when filing for chapter 7 bankruptcy. 

What is the debt limit for filing chapter 7 bankruptcy?

There are no debt limits related to chapter 7 bankruptcy, but what you may find are limitations that apply to your income level. If you make over a certain amount of money, you may not be able to file for chapter 7 bankruptcy. The court will be examining your debt-to-income ratio, so if you make enough to make payments on the debts you owe, you may have to file for chapter 13 bankruptcy instead. Your bankruptcy lawyer will help you determine which type of bankruptcy you should file depending on your debts and income level. 

Can student loans be included in your chapter 7 bankruptcy filing?

Student loans generally cannot be included in bankruptcy. These loans are provided through federal lenders in most cases, which means they are similar in form to IRS debts, which also cannot be discharged. If you have student loans that are especially making it difficult for you to get by financially, as your bankruptcy lawyers about potential options or talk to your loan servicer for advice. 

What about medical bills?

Medical bills can be included in chapter 7 bankruptcy filings. Medical bills are considered unsecured debt, and typically, including these types of debt in your bankruptcy should not be an issue. Do keep in mind that you may see limitations on how much of your medical bills can be discharged through chapter 7 bankruptcy depending on the laws in your state. 

Will filing for chapter 7 bankruptcy ruin your credit forever?

A bankruptcy never really ruins your credit. You will find many creditors that prefer not to loan money to anyone who has filed for bankruptcy within a certain time frame. For example, some creditors will not offer loans to anyone who has filed for bankruptcy in the last five years. If you make healthy financial choices after your bankruptcy case has settled and your debts are discharged, you could easily reestablish your credit score in spite of the bankruptcy. Chapter 7 bankruptcy may stay on your credit report for up to 10 years.

Contact a bankruptcy lawyer for more information.