Chapter 7 Bankruptcy Discharge
Generally, most people file for Chapter 7 bankruptcy to eliminate or wipe out their debts. Although there are some debts which are not dischargeable, most filers in a Chapter 7 bankruptcy will be able to eliminate most if not all of their debts. Credit card debts are the most common type of debt that is eliminated by Chapter 7 bankruptcy discharge, however there are other kind of debts that may also be discharged in a Chapter 7 bankruptcy.
What Is A Chapter 7 Bankruptcy Discharge? How Does It Work?
Simply put, a Chapter 7 bankruptcy discharge of a debt means that a debtor will no longer be held personally liable for a debt, and further the creditor is prevented from taking any collection actions against the debtor.
However, valid liens that have not been avoided (unenforceable) in a bankruptcy will remain payable. Accordingly, a secured creditor may enforce the lien to recover the property subject to the lien.
In the majority of case, debtors filing bankruptcy under Chapter 7 receive an automatic discharge of their debts at the end of their case. The court, usually grants a discharge 60 days after the meeting of creditors. Essentially this means that a debtor will receive a discharge approximately four months after filing his or her Chapter 7 petition.
What debts are dischargeable in a Chapter 7 Bankruptcy?
While there are some debts that may not be discharged, the majority of debts in a Chapter 7 will be discharged, especially if your case is not complicated. However, only debts that arose before the date of filing for Chapter 7 will be discharged. Thus, you will still be liable for debts that you incur after filing a Chapter 7 but before your receive a discharge.
According to the bankruptcy code, there are 19 categories of debt that cannot be discharged. All debts that do not fall part of these categories are dischargeable. Below is a list of dischargeable debts, however if these debts are coupled with any misconduct or fraud these acts may make the debt non-dischargeable.
What are the common debts that can be discharged?
- Credit card charges (including overdue and late fees)
- Personal loans from family, friends or employers,
- Medical bills and collection agency accounts,
- Student loans (only in certain circumstances),
- Dishonored cheques (not if based on fraud),
- Repossession deficiency balances,
- Auto accident claims (except those that involve drunk driving),
- Business debts,
- Money owed under lease agreements,
- Civil court judgments (except where they are based on fraud),
- Tax penalties and unpaid taxes past a certain number of years,
- Attorney fees (except child support and alimony awards),
- Revolving charge accounts (except extended payment charges),
- Social security overpayments, and
- Veterans assistance loans and overpayments.
If you are unsure if all of your debt can be eliminated by a Chapter 7 bankruptcy discharge, speak to one of our experienced bankruptcy lawyers. Debts that cannot be eliminated may be paid over time by filing a Chapter 13 bankruptcy.