Many people utilize bankruptcy as a way to seek financial relief from their debts by having them discharged. This essentially wipes out their debts and gives the person a fresh start because they no longer need to pay those debts back. However, if you find yourself in a situation where you need to use Chapter 7 bankruptcy, you may be wondering what that means for all the current bills that are coming in. Here is how you will deal with those existing debts.
Don't Pay Off These Debts
Some debts will be discharged with Chapter 7 bankruptcy, while others will not be discharged. It is important to understand which debts can be discharged so that you can stop making those payments. In general, your unsecured debt will not need to be repaid. This includes medical-related bills, credit card bills, and even personal loans that are unsecured. If you have an unsecured debt that will be discharged, stop paying it immediately.
Continue Paying These Debts
Keep in mind that you have secured debts that will not be discharged, and those should be paid or else you risk future financial penalties. For many people, this includes ongoing payments for their house or their vehicle, since the item that you are paying off is what secures the debt. Failure to pay could result in the item being taken away from you. There are also other types of debts that can never be discharged, such as taxes, child support, and alimony. Many student loans will not be discharged either. These bills must continue to be paid.
Use The Automatic Stay
When you stop paying some of your debts, it is possible that you will be contacted by your creditors for the money that you owe them. Sometimes creditors may even harass you constantly to get their money back. In this situation, you'll need to use the automatic stay laws to force those creditors to cut off contact with you. This gives you protection from requests to pay off debts, especially those being discharged, while you are going through the bankruptcy proceeding. Once the bankruptcy is finalized, those creditors will not be allowed to go after you for the debt that was discharged.
It's worth working with a local bankruptcy attorney to ensure that you are doing everything properly. They'll help file the necessary paperwork for the automatic stay, as well as handle communication with your creditors.