Are all Debts Cancelled with Chapter 7 Bankruptcy?

There are some people who call Chapter 7 bankruptcy as clean slate bankruptcy since if you file for this claim, it could help you have a clean slate. Does Chapter 7 bankruptcy really cancel all debts? There are cases where all debts are discharged but most of the time there are debts which could not be cancelled.

Below are the Debts that could be discharged with Filing Chapter 7 Bankruptcy:

  • Medical Bills
  • Credit cards
  • Utility bills that are long due
  • Personal loans
  • Garnishments in wages
  • Collection accounts
  •  Legal Judgments
  • Lawsuits
  • Deficiencies that resulted from property foreclosure and repossessed vehicle
  • Income tax debts
  • Settlements on Personal Injury

When you file for Chapter 7 bankruptcy, you could expect that most of your debts could be canceled. Most credits card debts especially those unsecured could be discharged. It would surely be a relief that personal loans and medical bills could be discharged. With the filing of the bankruptcy, you could continue receiving utility services since utility bills are discharged. For those who are in trouble of handling their finances due to garnishment of wages, it’s good that this could be stopped when filing for bankruptcy. Also, accounts from a collection agency would be cleared off. Legal judgment and lawsuits could also be discharged especially when it has something to do with payment of your debts. However, it is not possible to dismiss cases that pertain to crimes and fraud. Settlements of personal injury could also be discharged. Problems in payments related to repossessed vehicle could be discharged as well.

Below are Debts That Cannot Be Discharged by Filing Chapter 7 Bankruptcy

  • Debts that has something to do with a particular type of tax
  • Student loans excluding those that experience extreme financial crisis
  • Support payment like child support
  • Penalties and fines
  • Payment on personal injures which resulted from driving with influence

One thing is for sure, student loans could not be discharged. However, this would still have an exemption especially on students who experience severe financial turmoil where payment is definitely impossible. This exemption is rarely granted. There are also certain types of taxes that could not be cleared off. Any type of support payment could not be discharged since it is part of your responsibility and under the law it should be carried out by the one responsible to it. Discharge on debts related to settlements and fines for driving while in the influences of liquor or drugs is also not possible.

What will happen to the property of debtors?

One of the most common concerns that people have when filing for bankruptcy is what would happen to their property. It is certainly possible to retain your properties if you file for chapter 7 bankruptcy claim as long as regular payment is done by the debtor. However, if you plan not to keep anymore your properties, then it would be possible to eliminate all your debts.  The good thing about this bankruptcy is that you have the opportunity to clear out all your debts while having the chance to keep your property or avoid a foreclosure.

If you are struggling in paying for your debts, better consider filing for Chapter 7 bankruptcy. Even some people would treat this as their last option; it could also be a good start for debtors.

If you think that Chapter 7 bankruptcy is the option that you are looking for, do not hesitate to contact Riverside Bankruptcy Attorney. We understand what you are going through right now and would certainly do our best to help you. Get in touch with us now to experience a professional and affordable legal assistance.

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