If you’re filing for Chapter 7 bankruptcy you might think “all of my debts will be discharged” as soon as my proceedings are done. This is not necessarily the case.
While a lot of your debts will be discharged, not all of them will be. Chapter 7 bankruptcy does not give you a completely clean slate – you may still be responsible for some types of your debt.
Learn what types of debt will be – and will NOT be — discharged when you file for Chapter 7 bankruptcy.
Fortunately, you can discharge most of your unsecured debts through Chapter 7 bankruptcy. Unsecured refers to debt that you will not need to repay after bankruptcy. This includes debt that when you made the purchase, you didn’t agree that the creditor could take possession of your property if you failed to pay the amount owed.
Your unsecured debt can include debts such as:
- Credit card bills
- Medical bills
- Utility bills
- Personal loans
However, not all unsecured debt is dischargeable. Some types of debts you cannot wipe out during Chapter 7 bankruptcy are:
- Student loans: Even after your bankruptcy proceedings, you will be responsible for paying back your student loans unless you can prove you cannot afford to repay them.
- Fraud: If you incurred debt from fraud, you cannot discharge that money through bankruptcy. This can include lying to creditors to obtain funds and stating an incorrect income on your credit or loan application. If you feel like you have debt that falls under this category, then you should talk to your bankruptcy attorney about your situation and determine the best legal option.
- Large purchases made right before filing for bankruptcy: If you made a large purchase or racked up a bunch of debt right before filing for bankruptcy, the court may not let you discharge it through your bankruptcy proceedings. Some general rules of thumb are if you buy a large item worth more than $800 within 90 days of filing for bankruptcy, then that debt may not be dischargeable. This can show that you made a purchase without the intent of paying back the debt.
- Lawsuits: If you owe money from a lawsuit, it may not be dischargeable through your Chapter 7 bankruptcy proceedings.
- Tax debts: Any tax debt that you incurred within a few years of filing for bankruptcy might not be dischargeable. However, if it was several years before filing for bankruptcy and you did not commit tax fraud or tax evasion, then the court might let the debt be discharged.
In contrast to unsecured debt, secured debt is money owed that when you made the agreement with the creditor, you agreed that the creditor could put a lien on your property if you failed to make the payments. Your creditors can then sell the property and use the money towards the debt you owe.
Some common examples of secured debts in Chapter 7 bankruptcy are your house or your car.
Contact A Chapter 7 Bankruptcy Attorney
Do you have mounting debt you need to get rid of? You might be able to discharge some of it through Chapter 7 bankruptcy. If you are wondering what types of debt you can discharge during Chapter 7 bankruptcy, it’s crucial to hire an experienced attorney to help you after the process to navigate your new financial landscape. Our experts can help you determine what steps you need to take. We will also help clear up any confusion you might have after your bankruptcy is final! Don’t let debt ruin your life. Call (405) 529-9377 for a free case review.