Chapter 7 Bankruptcy: Which Debts Are Dischargeable?
Filing for chapter 7 bankruptcy enables you to escape all unsecured debt. With the help of a qualified attorney, you can eliminate most of your debts and escape repossession of your vital assets such as you home and car. It is advisable to use an experienced lawyer when filing for chapter 7 bankruptcy, as any mistakes could lead to loss of property. The lawyer will also represent you in negotiations with creditors and ensure you are protected from any harassment.
As much as the main goal of chapter 7 bankruptcy is to help you hold on to your property and wipe out your debts, there are some debts that cannot be discharged using this type of bankruptcy.
What is a discharge?
A bankruptcy discharge legally absolves you of the responsibility to pay a personal debt, meaning that creditors can no longer make any collection attempts. The discharge usually kicks in after the successful filing of chapter 7 bankruptcy, which could take a few months.
Although most debts are dischargeable, there are some that cannot be discharged, such as any secured loans like your mortgage or car loan, or statutory obligations such as child support, alimony awards and student loans. In addition, any debt you incur in the period right after filing for chapter 7 bankruptcy, but before the court finally grants you a discharge, will be undischarged.
Common categories of dischargeable debt include any unsecured loans such as credit card debt, personal loans from employers, friends or family, business debt and social security overpayments. Others include medical bills, utility bills that are past their due date, unpaid taxes and penalties, collection agency accounts and dishonored checks. However, any debt that is based on fraud automatically becomes non-dischargeable.
When is chapter 7 bankruptcy appropriate?
If you are seeking to eliminate some of your outstanding unsecured loans so you can have more income to service mandatory debt, this could be a suitable type of bankruptcy for you. You may also be suitable for this particular bankruptcy if you have a modest income that leaves you with little or no money after paying your living expenses such as food and rent, lack significant liquid assets and have limited equity on your house.
Chapter 7 bankruptcy offers you a clean financial slate, along with protection from creditors and the ability to hold on to vital assets. A qualified bankruptcy attorney can look at your financial situation and advice you on whether this form of bankruptcy would best suit you, and how you can improve your economic situation. For legal representation, visit sites like http://www.scottandscottlaw.com.
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