Typically, no one’s goal is to accrue large amounts of debt, but it happens for a variety of reasons. For some people in Pennsylvania, an unanticipated medical problem can cause a person to rack up tens of thousands of dollars of debt, or more. The loss of a job can also result in high amounts of personal debt, or poor economic conditions can cause a business to linger in the red. Chapter 7 bankruptcy protection is available to those who need a way out of their seemingly hopeless debt situations.
Married couples, individuals and companies can take advantage of Chapter 7 to quickly eradicate their debt. The obligations they can be relieved of through this type of bankruptcy filing include personal loans, past-due utilities, hospital bills, credit card debt and collection accounts. Owed rent can also be wiped out through this bankruptcy filing.
It’s worth noting that Chapter 7 does not eradicate a majority of back taxes as well as student loans. It also doesn’t get rid of child support or alimony that a court has ordered one to pay. In order to benefit from Chapter 7, a person must meet certain income requirements.
During a Chapter 7 bankruptcy in Pennsylvania, a party’s assets may be accumulated, or marshaled, and then liquidated. The assets that are reduced to cash can then be used to pay existing creditors. Any unsecured debt will finally be formally discharged. It can be a simple and responsible way to remove the burden of debt and experience a brand new financial start.
Source: Ebony, "The Different Degrees of Bankruptcy, Explained", Lynnette Khalfani-Cox, June 19, 2014