Expert: Terry Leeders - 12/27/2007

Question
Hope you had a Merry Christmas!

I'm at my wits-end with bill collectors harassing me...

About 4 years ago I have a very unexpected health crisis/illness that almost killed me. I was working 3-4 part-time jobs at the time, trying to get out of debt (only owed about $7,000).  This illness caused me to be completely out of work for a few months, and I have still yet to be able to work much at all.  I'm actually in the process of applying for disability because of it.

I have $30,000+ in unsecured debt (credit cards, lines of credit, medical bills) and an additional $3,000 in student loans.  I'm barely able to pay my enormous monthly health insurance premium, nonetheless pay anything towards any debt.  Everything spiraled out of control with late fees, higher interest rates and over limit fees since the illness started.

I want to honor my debts, but I can't honestly see a way to do so.  The only option I see is to file a Ch7 Bankruptcy.

My main question is: will a Ch7 bankruptcy (TN) cover everything owed to everyone? (Including student loans, credit cards, sba loans from being a sole proprietor, etc regardless of if they existed before or after the illness occurred?) How 'new' can a debt be and still be covered by a Ch7?

Thanks so much, I appreciate any help I can get.

Answer
You will list all debts in the chapter 7.  Student loan debts will not discharge.  You should check with your local attorney about the SBA debt, your personal obligation will be removed, but the business might.  The rest of your debts should be discharged under chapter 7 if you haven't recently run up the debt.  You can list all debts up to the date you file. Creditors can object for debt obtained within 60 days of bankruptcy.