Bankruptcy is designed to eliminate a variety of types of debt, including any debt related to personal loans. In fact, because of their classification, you have several options within bankruptcy to retire your debt relating to personal loans.
Your personal bankruptcy case can also address other types of debt you might be dealing with. In fact, different debts are often tied together. For example, you may have taken out a personal loan to pay for expensive medical bills. Many people use personal loans to cover expenses related to their house or car.
And with the recent economic problems, many people are turning to personal loans and payday loans just to make ends meet or make monthly utility bill payments. Fortunately, your personal bankruptcy case can address debt relating to:
If you need help getting your personal loan debt eliminated so you can regain control of your life, speak with a local personal bankruptcy lawyer. Complete the free form on this page and we'll connect you right away with a bankruptcy lawyer near you for a free initial consultation.
Personal loans and payday loans are considered unsecured debt. Unsecured debt is any type of debt that isn't tied to a specific piece of property. Secured debt would be your home mortgage or a car loan. Other types of unsecured debt include credit card bills, medical debt and utility bills.
It's important to know how personal loan debt is classified. Because it's unsecured, this type of debt could be entirely discharged with a Chapter 7 bankruptcy.
Chapter 7 bankruptcy is designed to completely eliminate all unsecured debts. If you have credit card or medical debt, this could be included in your filing, too. In order to qualify for Chapter 7, you must meet certain income requirements.
Also, before you file, be sure to check on the Chapter 7 bankruptcy exemptions for your state. Exemptions outline the amount and types of property that cannot be sold to pay back off your debts. In the vast majority of Chapter 7 cases there is no property sale.
To see if you qualify for Chapter 7, and to see if your property will be exempt, speak with a local bankruptcy attorney.
If you own lots of property or do not qualify for Chapter 7, your personal loan debt may also be resolved with Chapter 13 bankruptcy.
In this case, your personal loan debt will probably be reduced and then ordered and secured with your other debts, like your home mortgage. Then, with these debts frozen, you'll make one monthly payment to a bankruptcy trustee who will handle all of your creditors.
Then, after the court-approved repayment period, typically 3-5 years, your debts should be cleared and you'll have a fresh financial start.
Important note about personal loan bankruptcy: Both Chapter 7 and Chapter 13 provide the protection of the Automatic Stay. This court order puts an instant stop to foreclosure, repossession, lawsuits, wage garnishment and creditor phone calls and letters. You should be protected by the Automatic Stay during the duration of your case.
After you file bankruptcy you may think you are through with personal loans and credit cards. But the truth is, you may want or need credit or a loan again in the future.
While filing bankruptcy can negatively affect your credit, so can not paying your bills. So when you initially emerge from bankruptcy, it may be difficult to get a loan right away.
However, the good news is that bankruptcy gives people a fresh start. The slate, in many ways, is wiped clean. With no debt, you don't have to worry about missing payments. You can focus on rebuilding your credit.
At first, you may need a co-signer on major loans. But, with time and good credit building efforts on your part, you will likely be able to obtain personal loans, credit cards, car loans and even a mortgage loan after you file bankruptcy.Speak to a Bankruptcy Lawyer Today
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