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Additionally, you can discharge a loan regardless of whether the original lender has the loan or whether the lender sold it to a collection agency or debt buyer. Even if a creditor has initiated a wage garnishment you can still discharge the unsecured loan in Chapter 7 bankruptcy.
However, which type of bankruptcy you file will also depend on what kind of debt you have. Secured and unsecured debt is handled differently in Chapter 7 vs. Chapter 13. What is SecuredDebt? Secureddebts are a type of debt backed by an asset that is used as collateral. What is Unsecured Debt?
If you have a large amount of credit card debt or high medical costs that you can’t pay, Chapter 7 may allow you to start again. Chapter 7 is a disaster when it comes to secureddebt. . Chapter 7 will not assist you if your primary source of debt is a mortgage, auto loan, or other kinds of debt.
They may use collection agencies , or they may sue you (asking the court to garnish wages, take an asset, or put a lien on your home). One of the benefits of declaring bankruptcy is that debt collectors cannot try to collect on debts that were discharged in bankruptcy.
If you are seeking to discharge unsecured debts like medical debts, credit card debts and unsecured loans, then you need to file for Chapter 7 bankruptcy. However, if you are dealing with secureddebts like a mortgage or a car loan, then you need to file Chapter for 13 bankruptcy.
Whether you’re facing foreclosure , repossession, wage garnishments, or relentless creditor harassment, our expertise in bankruptcy law can offer the protection and relief you’ve been seeking. SecuredDebt vs. Unsecured Debt Not all debts are treated equally in bankruptcy court.
It stops: Debt collection efforts Foreclosures Wage garnishments Civil lawsuits Utility shutoffs Most other creditor actions to collect pre-bankruptcy debts The stay helps facilitate the goals of bankruptcy by preventing creditor collection efforts and allowing time for orderly debt restructuring or liquidation.
Chapter 7 bankruptcy, also known as liquidation or straight bankruptcy, can help those having financial difficulties clear away various types of debts. When you file for Chapter 7 bankruptcy, the Court will place an automatic stay upon filing, which stops creditors from collecting payments, garnishing wages, or repossessing property.
Instead, they will help you collect on the debt by filing a lawsuit against the debtor, seeking and obtaining attachments on the debtor’s assets, and even garnishing their wages post-judgment so that you can get paid for your judgment debt. Unlike Others, We Aggressively Seek Pre-Judgment Attachments to SecureDebt Recovery.
Bankruptcy does have some benefits, such as potentially putting a stop to wage garnishments or foreclosures. Usually during a Chapter 13 you only pay off part of your debts. Priority and secureddebts, such as taxes or auto loans, are paid in full. The Trustee’s office then pays various creditors.
If you still have unsecured joint debts with your ex-spouse, going through Chapter 7 will discharge your liability for the debt, but your former spouse will still be financially responsible unless they also discharge it through bankruptcy.
What Debts are Discharged in Bankruptcy? Unsecured debts , including credit card and medical bills, as well as some judgments or past taxes, may be discharged. Generally, secureddebt (loans backed by collateral), student loans, child support or alimony, recent taxes, criminal fines, or personal injury judgments cannot be discharged.
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