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Bankruptcy 101

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What sort of debts can I get rid of in a Chapter 7 Bankruptcy?
Generally speaking, a Chapter 7 liquidation seeks to distribute the value of any non-exempt assets of a Debtor to the Debtor's unsecured creditors, and any remaining unsecured debt balances will be discharged, meaning the creditors no longer have a right to recovery on that debt, permitting the Debtor to "start fresh."

Unsecured debt is usually anything that is not secured or tied directly to any collateral of the Debtor.

Credit cards, medical or utility bills, personal signature type loans are among the most common forms of this type of debt.

Often debts that are considered "secured," such as those held by a home mortgage creditor or vehicle loan creditor will become unsecured upon the surrender of that collateral by the Debtor, meaning that the Debtor can extinguish any remaining deficiency balances after a foreclosure or repossession without being forced to repay.

Student loans, taxes, domestic support obligations such as alimony, child support or other types of court ordered payments are also considered unsecured debt; however these are generally non-dischargeable, meaning that the creditor's right to recovery is not extinguished through the filing. However, under certain limited circumstances, even these may be subject to discharge. Consult an attorney for further information on your specific situation.

I already have a judgment against me and am being sued by my other creditors at every turn; what can I do?
Generally a Bankruptcy filing will automatically "stay" any collections activity against you, and any pending lawsuits must be dismissed or administratively held pending the outcome of your Bankruptcy. If you already have a judgment filed against you with a lien or "writ of fieri facias" entered, your bankruptcy attorney can file a motion to avoid lien against that judgment creditor, with the result of the lien being canceled in many cases entirely, along with the underlying discharge.

The amount of your assets and the availability of lawful exemptions under the Bankruptcy Code applied to your specific case will determine this. Again, consulting an attorney is vital with any kind of judgment liens against you currently.

Steve Mills is the managing partner in the law firm of Mills & Hoopes, LLC, in Lawrenceville, Georgia. For more information on our legal services or your legal needs in areas such as contractual matters, litigation, commercial real estate, immigration, environmental matters, wills, divorce and family matters, personal injury, collections, small claims, landlord tenant or any criminal matters, please visit out website www.millshoopeslaw.com 

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