Debt and bankruptcy often get described in moralistic terms, but many people in New Jersey struggle with debt through no fault of their own. Some of them have been doing fine until they suffer an illness or injury, lose a job or face some other sudden setback. Once they fall into debt, it can be extremely difficult to get out of it. Their unpaid balances gather interest, growing into something they can no longer control.
Chapter 7 bankruptcy is a powerful tool that can help people get their debts back under control by discharging some of their debt.
What is a discharge?
In bankruptcy law, a discharge is essentially a court order declaring that the debtor is no longer legally required to pay certain debts. The debtor is protected from their creditors as soon as they file for Chapter 7 bankruptcy. So long as the debtor abides by the terms of the bankruptcy, such as taking a course on credit and related issues, the court will issue the discharge about four months after the debtor has filed.
What types of debt?
Many common types of debt can be discharged through Chapter 7. These may include medical debt, credit card debt and other consumer debt.
There are also some types of debt that are excluded from discharge under U.S. law. These include certain types of tax debts, certain civil and criminal penalties, debts for child support and alimony, and debts for some types of educational loans.
For these non-dischargeable types of debts, there may be other options. An attorney with experience in debt relief can help people to understand their options to return to financial health.