Filing for a Chapter 7 bankruptcy is a serious undertaking that involves taking a close look at every aspect of your finances. As you work through the process, you might notice that you have some special circumstances to consider. Each of these circumstances can have a big effect on whether a Chapter 7 bankruptcy is right for you or not.
Non-dischargeable debts in a Chapter 7 bankruptcy can mean that the bankruptcy is fairly unnecessary. If most of your debts are for student loans, fraudulent debts, taxes, alimony or child support, it might not be a good idea to file for Chapter 7 bankruptcy. These debts can't be discharged so if they outweigh your dischargeable debts, you might be better off to consider other options. If non-dischargeable debts make up only a small portion of your debt load, Chapter 7 might be a good option for you.
Having a lot of debt that includes co-signers might make Chapter 7 a less-than-desirable option. When you file for Chapter 7 bankruptcy, your co-signers aren't protected from collections activities. That means that they might be stuck paying for your debts. In this case, a Chapter 13 bankruptcy might be a better option for your needs.
The desire to favor one creditor over another is another special circumstance. While you might want to pay off a particular debt, you still have to include it in the bankruptcy filing. That doesn't mean that you can't pay the debt, however, because you do still have the right to pay off a debt that was discharged in your bankruptcy.
It is always important to explore your options for bankruptcy before you settle on one option. Knowing how your special circumstances might be affected by a bankruptcy filing can often help to steer you in the right direction.
Source: Enlighten Me, "Tips for Filing Bankruptcy," accessed May. 07, 2015