If you are drowning in debt and some of your debts are very old, you might wonder if you will have your debts hanging over your head for the rest of your life. However, this is not necessarily the case. The statute of limitations and bankruptcy can lead to your debts disappearing. 

How the Statute of Limitations Can Affect Your Debt

A statute of limitations places restrictions on when an individual can take legal action against another individual. There is usually a specific deadline that depends on the state in which you reside. For example, you might only have a few years to file a lawsuit against an individual. Once the statute of limitations has passed, your debtors will most likely not be able to seek compensation unless they sue you and obtain a judgment.

However, some creditors are happy to file a lawsuit and will be able to collect damages from you after the judgment has been obtained. If this is the case, you may only be able to discharge your debts through a Chapter 7 or Chapter 13 lawsuit.

Discharging Your Debt Through Chapter 7

With a Chapter 7 lawsuit, your debts will be fully discharged. However, your assets will also be liquidated and sold to pay for some of your debts. You will also not have control over which creditors are paid. However, even debts that you hold as a result of a judgment will be discharged under Chapter 7.

Discharging Your Debt Through Chapter 13

You should discuss with a bankruptcy attorney whether filing for Chapter 7 bankruptcy is the right option or if it is even possible. If your income is too high, you may only be able to file for Chapter 13 bankruptcy. With this form of bankruptcy, you will be able to eventually discharge your debts. However, you will need to spend several years making payments until you are able to fully pay off all of your debts.

How to Make Sure Your Petition Is Approved

If you file for the wrong type of bankruptcy, you might have your bankruptcy converted into a different type of bankruptcy. In some cases, your bankruptcy case might even be thrown out and you will be forced to pay for your debts. For these reasons, you will want to always consult with a bankruptcy attorney to make sure that you do everything necessary for your bankruptcy petition to be approved by the court.

Contact a local law firm, such as McManus & Associates, to learn more about bankruptcy law.