I get social security and don't own a home or car. I have huge debts. Should I file for bankruptcy?

Learn about your options if you owe unsecured debt, but don't have assets or income that creditors can go after.

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I get social security and don't own a home or car. My credit card and medical debts are huge. Should I file for bankruptcy?

If you owe a lot of unsecured debt and don't have any assets or income that a creditor can seize or garnish, you have two good choices: File bankruptcy or do nothing.

Do Nothing

If a creditor has obtained or will obtain a judgment against you, but you have no assets, then there is not much that creditors could do to force you to pay. Federal law prohibits a creditor from garnishing your social security earnings -- so that will be safe as well.

Just because a creditor cannot get your social security through garnishment does not mean that creditors will stop calling you or sending you collection notices, though. It might even sue you and force you to appear at court for a collection-related hearing, such as a creditor's exam.

If you understand and are comfortable with this and cannot afford the filing fees and attorney fees involved with a bankruptcy filing, then this strategy may be your best option.

Chapter 7 Bankruptcy

If you can scrape the money together to cover your bankruptcy costs and fees, or are able to find an attorney who can offer you bankruptcy services for free or at a reduced cost, then filing for Chapter 7 bankruptcy may be good idea. If your only income is social security and you don't own any property, then Chapter 7 bankruptcy will be a relatively easy process for you.

In Chapter 7 bankruptcy, you are able to discharge most or all of your debts. In exchange, you must give up certain property to the bankruptcy trustee to repay your creditors. If, however, you don't have any property to give up, then you don't stand to lose anything. Even if you do own some property, you get to keep it if it is exempt. To learn more, see our Bankruptcy Exemptions area.

In addition to providing you relief from annoying and stressful collection actions, getting a Chapter 7 bankruptcy may also improve your credit, as it will eventually clean up any lengthy derogatory credit items on your credit report.

Before making the final decision, you should consult with a local bankruptcy attorney or research more to make sure there aren't less-obvious issues particular to your situation. For more information, visit our Chapter 7 Bankruptcy area.

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