What is a Chapter 7 Bankruptcy?
In determining what is a Chapter 7 bankruptcy, it is important to note that it is one of the most commonly filed consumer bankruptcies. It offers an attractive debt relief strategy for many debtors because of its simplicity. A Chapter 7 bankruptcy eliminates most secured debt. This means that once you receive a discharge on that debt, you are no longer obligated to pay it back.
What is a Chapter 7 bankruptcy: The discharge
A Chapter 7 bankruptcy discharge is the official order of judgment that you receive from the bankruptcy court relinquishing your obligation to repay debt. Only debts that were included in your bankruptcy petition may be discharged. Any debts incurred between filing your petition and receiving your discharge will not be discharged. In some cases, debtors may honestly forget to include a creditor on the petition. Provided that you did not intentionally leave out certain creditors on your petition, the Court may reconsider including these debts in your discharge.
What is Chapter 7 bankruptcy: Dischargeable Debt
A Chapter 7 bankruptcy is very powerful and can eliminate most unsecured debt including:
- Credit Card Debt
- Medical Bills
- Utility Bills
- Pay day loans
- Personal loans from friends, family and employers
- Repossession deficiency balances
- Civil court judgments
- Certain tax penalties and unpaid taxes
What is a Chapter 7 bankruptcy: Non-Dischargeable Debt
When defining what is a Chapter 7 bankruptcy, it is important to keep in mind the debts that can be discharged. Although a Chapter 7 bankruptcy can “wipe out” most unsecured debt, there are some obligations that have to be paid back including:
- Child support and alimony
- Debt owed to government agencies in the form of fines or penalties
- Certain taxes
- Attorneys fees in child support to custody matters
- Court penalties and fines
- Debt owed on personal injury lawsuits.
What is the difference between a Chapter 7 bankruptcy and Chapter 13 bankruptcy?
A Chapter 7 bankruptcy eliminates most unsecured debt, whereas a Chapter 13 bankruptcy requires all or a portion of outstanding debt to be paid back over a period of time.