If it seems that your financial problems keep snowballing and the debt just keeps mounting, you may be considering a variety of options, including bankruptcy. There is no one-size-fits-all answer to debt, as solutions often depend on the situation you are in.
A Chapter 7 bankruptcy in New Hampshire can offer several benefits but can also have drawbacks for some. Discussing your situation with an attorney can give you clarity and steer you towards effective solutions.
Liquidation and sale
Filing a Chapter 7 petition can help you get rid of certain types of debt. The bankruptcy trustee takes inventory of your assets and sells off any that do not fall within the list of exemptions. The proceeds, minus exempted amounts, go to pay your creditors. In many cases, this means the creditors accept less than what you owe them, and the remainder is discharged.
Exemptions to the asset sale generally include property such as a home (up to a certain equity value), insurance, pensions, household furniture and utensils, necessary appliances, tools and some types of personal items. If you are still making payments on exempt property, such as a house or a car, you may be able to keep it if you are current on your payments and your equity does not exceed the exemptions. If you have more equity than the exemption allows, the trustee may choose to sell the asset and pay you the value of your exemption before using the proceeds for debt repayment.
Some debts will remain in a Chapter 7 bankruptcy. These typically include child support, student loans and some types of taxes.
Signing a reaffirmation agreement can allow you to keep some secured debts if you are current on payments. If you have fallen behind, you need to catch up before you can reaffirm the debt. This will mean you keep the asset but continue making payments. Your bankruptcy will affect the amount of the debt. The alternative for these debts is to allow the creditor to repossess them.