Discharging Debts through Chapter 7
Filing a Chapter 7 bankruptcy is a way of discharging unsecured debts. Unsecured debts are usually credit cards and medical bills. In some cases the car and homes become unsecured debts, if for what ever reason you can not afford them any more.
The bankruptcy laws changed back a couple years ago, but the chapter 7 bankruptcy is the same it is not a pay back plan it is a discharge of the unsecured debts. Meaning you do not have to pay any money back.
The rules did change some, your income is determine by the last six months instead of the next day after losing your job. Depending how much you were making you might have to wait up to six months before you would qualify under what is call the Means Test. They came up with average income for different family sizes and average expenses for were you live.
This is why talking to Bankruptcy Attorney if there has been a major change in your income is so important. Doing it before you go and take money from your 401k because that would count as income and now you would have to wait longer to file.
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