Chapter 7 Bankruptcy Discharge
The reason to file Chapter 7 bankruptcy is to discharge your debts. The bankruptcy discharge is a “wiping away” of your eligible debts. Some debts are “nondischargeable,” but most people who file Chapter 7 can discharge most, if not all, of their debts. While unsecured debts, such as credit cards and medical bills, are the most common dischargeable debts, there are many debts that Chapter 7 will discharge.
What is the Bankruptcy Discharge?
The bankruptcy discharge absolves a debtor from his liability for the debt that is discharged. It becomes illegal for a creditor owed that debt from collecting against you. You are no longer legally required to payback any debt that is discharged. In fact, if a creditor attempts to collect a discharged debt, you actually may have a cause of action against the creditor.
However, even if you are no longer personally liable for a discharged debt, a lien that has not been avoided (removed) in the bankruptcy case will stay attached to the collateral. Therefore, a secured creditor whose lien is not actively stripped in a bankruptcy, can still repossess the collateral after the case. So be sure to tell a bankruptcy attorney if any of your debts are secured.
Typically, a Chapter 7 bankruptcy debtor will receive a discharge at the end of her case. In Chapter 7, the bankruptcy court usually grants the discharge order 60 days after your Meeting of Creditors. This means you should receive your discharge about four months after you file your Chapter 7 petition.
What Debts Are Dischargeable in Chapter 7?
Not all debts are dischargeable in Chapter 7. Most of your debts will likely be discharged in a Chapter 7. First, only debts that existed before the date of filing your Chapter 7 will be discharged. Any debts incurred after the filing date (or “post-petition”) are not included in the discharge.
The Bankruptcy Code lists the types of debt that cannot be discharged, such as alimony, child support, and certain taxes to name a few. A debt that is not included in the Bankruptcy Code list is dischargeable. Next is our own list of the typical dischargeable debts. But, any misconduct or fraud relating to a dischargeable debt can remove it from your discharge.
- credit cards
- accounts in collection
- medical bills
- personal loans
- utility bills
- bounced checks
- repossession balances
- auto accident claims (except those if you were drunk driving)
- business debt
- past due rent
- some past due taxes
- student loans, if you qualify
This list is not exhaustive, and an individual’s circumstances can always make exceptions. Be sure to contact us so we can help you determine which of your debts qualify for Chapter 7 Bankruptcy.