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?

  1. Credit card charges (including overdue and late fees)
  2. Personal loans from family, friends or employers,
  3. Medical bills and collection agency accounts,
  4. Student loans (only in certain circumstances),
  5. Dishonored cheques (not if based on fraud),
  6. Repossession deficiency balances,
  7. Auto accident claims (except those that involve drunk driving),
  8. Business debts,
  9. Money owed under lease agreements,
  10. Civil court judgments (except where they are based on fraud),
  11. Tax penalties and unpaid taxes past a certain number of years,
  12. Attorney fees (except child support and alimony awards),
  13. Revolving charge accounts (except extended payment charges),
  14. Social security overpayments, and
  15. 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.