Chapter 7 bankruptcy can provide freedom from oppressive debt. However, to avoid falling into financial trouble again, you need to make adequate preparations. Here are two things people often forget to do when filing for Chapter 7 bankruptcy.
Budget for Ongoing Payments
When people file for bankruptcy, an automatic stay prohibits creditors from trying to collect on the debts owed for the duration of the case. The problem is people don't realize that only applies to consumer debt and balances due at the time they filed bankruptcy.
For instance, the automatic stay prevents your landlord from suing you for past-due rent, but the person is within his or her rights to collect rent that comes due after you file for chapter 7 bankruptcy. The landlord can even petition the court to lift the automatic stay and evict you if you don't pay your rent going forward.
Thus, you need to make a list of recurring bills that must be kept current going forward. In fact, you should make a budget to ensure you are living within your means; otherwise, you're going to end up with more money problems and fewer solutions.
Make Arrangements for Non-Dischargeable Debt
Not all debt can be eliminated in a chapter 7 bankruptcy. Some debts—such as student loans, certain taxes, and some court costs—are non-dischargeable, meaning you will still be responsible for paying them even after your case ends.
Depending on your circumstances, though, you may be able to get some debts discharged when you file for Chapter 7 bankruptcy. For instance, you may qualify for a hardship discharge of your student loans if you can prove paying them would present an undue burden. A bankruptcy attorney can advise you whether an exception exists for your non-dischargeable debt, so it's best to speak to them about it.
If you can't get an exception for your non-dischargeable debt, then you need to make a plan for dealing with them once the automatic stay ends. This may involve negotiating with the lender for reduced payments or turning around and filing a chapter 13 bankruptcy to pay off the debt over time while enjoying the protection of the automatic stay.
Consider the options available and choose the one that fits your needs the best.
For more information about filing Chapter 7 bankruptcy or help with your petition, contact an attorney near you like those at C. Taylor Crockett, P.C.