Is filing for chapter 7 bankruptcy bad?
Filing for bankruptcy should be a last resort and not all things can be written off by filing bankruptcy. For people who cannot pay off their debts, bankruptcy is an option of last resort. Filing for bankruptcy means you have exhausted all efforts to pay your debts and are petitioning the government to discharge, or forgive, some of them. The most common reasons for filing for bankruptcy include the following: Catastrophic events: loss of spouse or partner, medical bills, or job loss Extensive credit card debt Inability to meet minimum payments on loans Debts that are most often discharged in bankruptcy (meaning that you no longer have any liability for their payment) include credit card debt, medical debt, and other unsecured debt. Debts not dischargeable under bankruptcy include student loans (except for special circumstances such as disability or extreme hardship), bank taxes from the last three tax years, criminal fines and penalties, domestic support such as child support, and secured loans, such as car loans and mortgages, of assets you wish to keep. Unpaid student loans, unlike most loans, may result in loss of Social Security benefits, up to 15% of the benefit over the amount of $9,000 annually or $750 per month. For more on this complex issue, check the Department of Education Web site, http://www.ed.gov. It is important to note that declaring bankruptcy has severely damaging effects on a person’s credit score. Consult with a financial professional before considering that option, as it may not be in your best interest.